JGBs slide following overnight drop in U.S. Treasuries; 10-year yields hover at February high

The Japanese government bonds plunged Friday as investors moved away from the safe-haven buying amid weakness in the U.S. debt market.

The benchmark 10-year bond yield, which moves inversely to its price, rose 1 basis point to 0.04 percent, the yield on long-term 30-year note also climbed 1 basis points to 0.60 percent and the yield on short-term 2-year note bounced 1/2 basis point to -0.17 percent by 06:00 GMT.

The JGBs have been closely following developments in the U.S. debt market. The United States benchmark 10-year Treasury yield climbed to 2.43 percent, highest since July last year.

In addition, crude oil prices fell more than 1 percent as investor booked profit after a long rally post-OPEC deal. The International benchmark Brent futures fell 1.09 percent to $53.35 and West Texas Intermediate (WTI) dipped 0.80 percent to $50.65 by 04:30 GMT.

The Organization of the Petroleum Exporting Countries (OPEC) has agreed to cut production by roughly 1.2 mb/d to 32.5, which equates to a 4.5-4.6 percent cut per member country. We believe the outcome is consistent with our view of what OPEC production levels were expected to be in 2017 irrespective of the deal reached yesterday, reported Barclays in its research note.

In other words, the meeting is highly unlikely to substantially affect the oil market balance.  Compared with our assessment of OPEC supply last month, we have adjusted our first-quarter of 2017 production estimate lower by 350 kb/d, which will result in a slightly steeper draw than our balances were forecasting, they added.

Moreover, Bank of Japan board member Makoto Sakurai said in a speech to business leaders in the city of Otsuthe that the Bank of Japan will continue to purchase massive amounts of government bonds even under its new policy framework targeting interest rates.

Meanwhile, the benchmark Nikkei 225 closed 0.47 percent lower at 18,426.08. While at 06:00 GMT, the FxWirePro's Hourly Japanese Yen Strength Index remained slightly bearish for third straight day at -78.52 (lower than -75 represents bearish trend).