Japan Bond Futures Fall to Five-Week Low on View U.S. Job Market Improving
By - Apr 7, 2011 2:04 PM GMT+0700
Japanese bond futures dropped to a five-week low before a report that economists said will show fewer Americans filed for jobless claims, adding to signs the U.S. labor market is improving.
Ten-year bonds declined for a second day after Treasuries fell yesterday as speculation global growth is gathering momentum reduced demand for the safety of government debt. Losses in bonds were tempered after the Bank of Japan kept interest rates near zero and said it would offer 1 trillion yen ($11.7 billion) in one-year loans to businesses hurt by the nation’s record earthquake.
“Bonds are extending a loss following yield gains overseas,” said Akihiko Inoue, chief market analyst in Tokyo at Mizuho Investors Securities Co., a unit of the nation’s second- largest bank. “The global economy outside Japan seems to be good.”
Ten-year bond futures for June delivery dropped 0.26 to 138.72 at the 3 p.m. local close of trading on the Tokyo Stock Exchange, after sliding to 138.65, the lowest since March 10.
The yield on the 1.3 percent bond due March 2021 rose 1.5 basis points to 1.31 percent as of 3:49 p.m. in Tokyo at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The price dropped 0.132 yen to 99.912 yen.
Bonds started the day weaker after Treasury 10-year yields climbed seven basis points yesterday to 3.55 percent. U.S. notes were little changed today.
The number of U.S. workers filing first-time claims for jobless benefits declined by 3,000 to 385,000 last week, according to a Bloomberg News survey before today’s Labor Department report.
BOJ Meeting
Losses in bonds were limited as the BOJ downgraded its economic assessment for the first time since October. The central bank held its benchmark overnight rate at a range of zero to 0.1 percent and kept unchanged its credit program and an asset-purchase fund that represent the BOJ’s main policy tools.
The quake-aid lending program “represents the BOJ’s efforts to support commercial lenders who have been suffering in the disaster-hit areas,” said Takeshi Minami, chief economist at Norinchukin Research Institute Co. in Tokyo. “The new scheme will contribute to stabilizing financial markets.”
Japan’s economy is under “strong downward pressure” after the March 11 earthquake damaged production facilities and weakened the financial positions of companies, particularly small enterprises, the central bank said in its statement at the end of a two-day meeting. Pressure will persist “for the time being” before the economy recovers, it said.
“The bias continues to be for the BOJ to do some kind of additional easing,” Akito Fukunaga, chief rates strategist at the brokerage unit of Royal Bank of Scotland Plc in Tokyo, wrote in a research note. “Short- and medium-term yields will remain in a downtrend and long-term yields will struggle to rise.”
To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net.
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.
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