JGBs gain at close after risk sentiments suffer on IMF’s 2019 global growth forecast downgrade

The Japanese government bonds gained at the time of Asian close Wednesday after investors’ risk sentiments took a bow following a global growth forecast downgrade by the International Monetary Fund (IMF) yesterday for this year, to 3.3 percent, lowest since 2009, from prior 3.5 percent.

The yield on the benchmark 10-year JGB note, which moves inversely to its price, slumped 6 basis points to -0.059 percent, the yield on the long-term 30-year slipped 1 basis point to 0.530 percent and the yield on short-term 2-year plunged 16-1/2 basis points to -0.165 percent by 06:00GMT.

Overnight, S&P500 closed lower amid growing concerns that US-EU trade relations will take a turn for the worse with the US plan to levy about US$11b of tariffs on European goods to retaliate on the Airbus issue, while UST bonds rallied with the 10-year yield at 2.5 percent.

EU leaders will now consider the duration of the next Brexit extension, with a preference for a flexible extension for up to a year yet allow for Brexit when an agreement is settled.

Lastly, the Bank of Japan offered to buy JPY480 billion ($4.32 billion) of five- to 10-year bonds in a regular debt-purchasing operation, providing support to the broader market.

Meanwhile, the Nikkei 225 index closed 0.56 percent lower at 21,681.50, while at 06:00GMT, the FxWirePro's Hourly JPY Strength Index remained highly bullish at 148.19 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex