JGBs surge tracking U.S. Treasuries on safe-haven demand after Trump threatens to slap additional tariffs on China

The Japanese government bonds surged during late Asian session Thursday as investors flocked into safe-haven assets tracking United States Treasuries after President Donald Trump threatened to slap additional tariffs on an additional USD267 billion of Chinese imports if the latter decides to retaliate back sharply.

Japan’s benchmark stock index Nikkei 225 slumped to a 1-month low, suffering over 4 percent, adding to further rise in debt prices.

The yield on the benchmark 10-year JGB note, which moves inversely to its price, suffered nearly 1-1/2 basis points to 0.141 percent, the yield on the long-term 30-year note slumped 2 basis points to 0.923 percent and the yield on short-term 2-year traded tad lower at -0.118 percent by 05:30GMT.

According to a report from CNBC, many investors have grown concerned that rates are rising too far, too fast, threatening to derail the economy. Attractive yields can also push investors away from the riskier equity market and into the relatively benign Treasury market.

The report also added that the now-widespread view that the labor market is near or beyond full employment and shows wages are starting to accelerate higher. This could be a worry for the Federal Reserve trying to keep a lid on inflation.

Meanwhile, the Nikkei 225 index plunged 4.45 percent to 22,475.00 by 05:35GMT, while at 05:00GMT, the FxWirePro's Hourly JPY Strength Index remained highly bearish at 129.73 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex