JGBs fall as Nikkei surge curbs appetite for debt

* Govt debt dragged lower as Nikkei jumps 2.8 pct

* Bargain hunting limits rise in yields

* JGBs supported by views overseas yields will stay anchored

By Shinichi Saoshiro

TOKYO, July 14 (BestGrowthStock) – Japanese government bonds fell on
Wednesday, with futures touching a two-week low, as investor
appetite for debt was curbed after Tokyo stocks surged in
response to a continuing bull run on Wall Street and a pull back
by the yen from recent peaks.

The rise in JGB yields was limited by investors ranging from
regional banks to publicly affiliated financial institutions
hunting for bargains in longer-dated debt, underscoring
persistent demand for bonds.

September 10-year futures (2JGBv1: ) fell 0.18 point to 141.22
after hitting a two-week low of 141.12.

“The rises in JGB yields are limited considering how bullish
U.S. stocks (Read more about the stock market today. ) have been the last few days,” said Makoto Noji, a
senior market analyst at Mizuho Securities.

“In addition to the large gap between bank lending and
deposits at home, another key factor supporting JGB yields is the
investor view that overseas yields will stay anchored.”

Noji pointed out that the level of U.S. one-year overnight
index swaps (USD1YOIS=: ) showed that investors saw little chance
of the Federal Reserve hiking rates for the next year despite the
recent surge in stocks.

The Bank of Japan begins a two-day policy board meeting on
Wednesday. The central bank is widely expected to keep monetary
policy unchanged and focus is on its monetary policy stance
following the ruling party’s heavy defeat in an upper house
election on Sunday.

Some analysts say the election drubbing may put pressure on
the Bank of Japan to ease more, while others reckon the recent
pull back by the yen from its peaks and the significant equity
market rebound from a seven-month trough could lift the pressure
on the central bank.

The five-year yield (JP5YTN=JBTC: ) rose 1 basis point to 0.375
percent, following a 2.4 trillion yen ($27 billion) auction of
the maturity on Tuesday.

The benchmark 10-year yield rose 1.5 basis points to 1.140
percent (JP10YTN=JBTC: ) and the 20-year yield climbed 1.5 basis
points to 1.840 percent (JP20YTN=JBTC: ).

Japan’s Nikkei climbed 2.8 percent on Wednesday, as tech
firms gained after Intel (INTC.O: ) results beat expectations,
buoying overall sentiment. [.T]
(Editing by Joseph Radford)

JGBs fall as Nikkei surge curbs appetite for debt