Japanese government bonds hovered around yesterday’s lows during late Asian session Tuesday as demand for safe-haven instruments shot up globally, tracking deepening political fears over Italy and other geopolitical tensions.
The 10-year JGB yield registered a low of 0.023 on Tuesday while climbing to its intra-day high of 0.044, while on Wednesday, the Japanese debt market remained almost range-bound within 0.024-0.030 and close to the previous low.
The yield on the benchmark 10-year JGB note, which moves inversely to its price, slipped 1 basis point to 0.02 percent, the yield on the long-term 30-year note slumped 2 basis points to 0.70 percent and the yield on short-term 2-year traded tad lower at -0.14 percent by 05:00GMT.
The fall in yields came after Italy’s president appointed a former International Monetary Fund official as an interim prime minister, who has to plan for fresh elections and pass a budget. Investors believe the election will further underpin a mandate for anti-establishment, euro-skeptic politicians, stoking worries about Italy’s future in the eurozone.
Analysts believed though that the Italian situation is contained for now. The spreads of other peripheral government bond yields over German Bunds have increased, but not by a substantial level, Reuters reported.
Meanwhile, the Nikkei 225 index slumped 1.58 percent to 22,005.00 by 05:30 GMT, while at 05:00GMT, the FxWirePro's Hourly JPY Strength Index remained neutral at 51.93 (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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