JGB yields slump in line with U.S. peer following ECB’s stimulus decision; Q4 GDP beats estimates

The Japanese government bond yields slumped towards the end of Asian session Friday, tracking the footsteps of the U.S. Treasuries after the ECB’s stimulus-lending decision and stance on delayed rate hikes weighed on global government bonds.

However, investors have largely shrugged-off the higher-than-expected rise in Japan’s gross domestic product (GDP) for the fourth quarter of 2018 and household spending data for the month of January, released late yesterday.

The yield on the benchmark 10-year JGB note, which moves inversely to its price, slumped 3 basis points to -0.029 percent, the yield on the long-term 30-year plunged nearly 4 basis points to 0.590 percent and the yield on short-term 2-year suffered 14-1/2 basis points to -0.144 percent by 05:10GMT.

The ECB turned distinctly more dovish and revived its Targeted Longer-Term Refinancing Operations (TLTRO) earlier than expected, which likely spooked markets. Although the ECB kept its policy rate steady and cut its growth forecasts (2019: 1.1 percent from 1.7 percent), the Euro slipped to its lowest since 2017. Wall Street also ended lower, dragged down by tech stocks, whilst the UST bonds and USD gained overnight, OCBC Treasury Research reported.

"A risk-off is tone likely to keep Asian markets in consolidation mode today as investors await the US’ key nonfarm payrolls report tonight," the report added.

Meanwhile, the Nikkei 225 index plunged over 2 percent to 21,019.00, while at 06:00GMT, the FxWirePro's Hourly JPY Strength Index remained highly bullish at 172.18 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex