JGBs gain from short-covering on hovering nuclear war tensions ahead of long weekend

The Japanese government bonds gained Thursday after investors covered previous short positions on growing geo-political tension between the US and North Korea over a possible nuclear war ahead of a long weekend in Japan.

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, traded tad lower at  0.06 percent, the yield on long-term 30-year note rose nearly 1 basis point to 0.86 percent and the yield on short-term 2-year traded flat at -0.10 percent by 05:40 GMT.

Tensions have risen markedly in the past few days after North Korea warned Washington of a "severe lesson" following U.N. action against it and U.S. President Donald Trump in turn warning that any threats to the United States from Pyongyang would be met with "fire and fury." Trump's unexpected remarks prompted North Korea to respond by saying it was considering plans for a missile strike on the U.S. Pacific territory of Guam.

Meanwhile, Japan’s Nikkei 225 traded 0.09 percent lower at 19,721.50 by 05:40GMT, while at 05:00GMT, the FxWirePro's Hourly Yen Strength Index remained neutral at 66.46 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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