JGB yields plummet over U.S.-Iran military tensions ahead of U.S.-China trade talks

The Japanese government bonds closed higher on Tuesday as investors remain worried over the United States’ military sanctions on Iran, that pushed demand for safe-haven assets ahead the trade talks between the U.S. and China, scheduled to be held at the G-20 Osaka Summit in Japan this weekend.

Also, the country’s retail sales data for the month of May, scheduled to be released on June 26 by 23:50GMT shall provide further direction to the debt market.

At close, the yield on the benchmark 10-year JGB note, which moves inversely to its price, plunged 15-1/2 basis points to -0.154 percent, the yield on the long-term 30-year edged 2 basis points lower to 0.329 percent and the yield on short-term 2-year plummeted nearly 23 basis points to -0.227 percent.

The US administration had announced sanctions on Iranian Supreme Leader and eight senior military commanders, so watch for any retaliatory moves which could keep the heat on US-Iran tensions for the near-term, OCBC Treasury Research reported.

Further, US Trade Representative Robert Lighthizer reportedly spoke to Chinese Vice Premier Liu He on Monday, as both sides prepare for their respective country leaders to meet in this week’s G20 summit. China’s commerce ministry confirmed the call but no other details were made available at time of writing. The Trump-Xi meeting is likely to take place over the weekend, even though no official time has been set for the highly anticipated meeting, the report added.

Lastly, earlier today, Japan’s finance ministry auctioned 20-year government debt at a lowest price of 103.55 yen, which was in line with bond dealers’ expectations, Reuters reported.

Meanwhile, the Nikkei 225 index closed tad lower at 21,162.94, while at 06:00GMT, the FxWirePro's Hourly JPY Strength Index remained neutral at -54.42 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex