JGBs are continuing sovereign debt rally on Friday, fuelled by central bank bond purchases, dovish outlook, a weaker economy and run for the safe havens with approaching Brexit. A recent drop in equities, also fuelling rallies in bonds.
Japanese 10-year bond yield dipped to a record low of -0.15 percent. In March japan sold the 10-year bond in negative for the first time in history. Today 15-year yield dropped below negative for the first time to -0.04 percent.
This month’s job report from the United States triggered a massive rally in government bonds in expectations that U.S. Federal Reserve policymakers will once again have to downgrade their interest rate expectations. In addition to that European Central Bank (ECB) has started purchasing corporate securities this week and results show they are buying into bonds that are at the end of the spectrum, suggesting bigger take up of risks than anticipated.
In Japan, data showed that producer prices remain well anchored to the negative. In May, it suffered 4.2 percent y/y contraction.
