JGBs rise after US Treasury acts to bring down borrowing rates
TLT•Japanese government bonds rally after U.S. Treasury move
Japanese government bonds (JGBs) rallied on Thursday after the U.S. Treasury took action to arrest a spike in long-term borrowing rates, calming global debt markets.
Here are a few details:
- The benchmark 10-year JGB yield JP10YTN=JBTC dropped 5.5 basis points (bps) to 2.835%. The 20-year yield JP20YTN=JBTC slid 8.5 bps to 3.690%. Yields move inversely to bond prices.
- Long-dated U.S. Treasuries rallied on Wednesday after the Treasury Department said it would double the size of liquidity support buyback operations for longer-dated notes and bonds.
- The Ministry of Finance sold about 2.5 trillion yen ($15.78 billion) in 20-year bonds on Thursday. The sale's bid-to-cover ratio, a measure of demand, was 3.98, lower than the sale in July but still above the average over the past year.
- "The U.S. Treasury’s action appears to have temporarily halted the global trend of rising long-term interest rates," Takayuki Miyajima, senior economist at Sony Financial Group, said in a note. "Speculation is growing that Japan will also implement measures to address supply-and-demand issues."
- Long-term borrowing costs from the U.S. to Germany and Japan hit their highest in decades earlier this week, reflecting concerns about ballooning government debt and inflation caused by persistently high oil prices amid the Middle East conflict.
- The yield on the 40-year JGB JP40YTN=JBTC, Japan's longest tenor, fell 9.5 bps to 4.055%. The 30-year yield JP30YTN=JBTC eased 8.5 bps to 3.995%.
- The two-year yield JP2YTN=JBTC, the one most sensitive to Bank of Japan policy rates, held steady. The five-year yield JP5YTN=JBTC decreased 3 bps to 2.090%, down from a record high touched earlier this week.
