JGBs witness sell-off as FBI comments boost risk sentiments, Hillary Clinton’s lead in latest poll supports

The Japanese government bonds slumped Monday as market rejoiced the decision taken by the Federal Bureau of Investigation (FBI) to close the case against U.S. Democrat presidential candidate Hillary Clinton over mishandling classified emails.

Also, investors moved away from the safe-haven buying after recent United States presidential election poll showed that Clinton holds a four-point lead over Republican Donald Trump.

The benchmark 10-year bond yield, which moves inversely to its price, rose 1 basis point to -0.054 percent, the yield on long-term 30-year Treasury also climbed 1 basis point to 0.50 percent and the yield on short-term 2-year ½ basis point to -0.25 percent by 06:30 GMT.

Global Treasury yields jumped after FBI Director James Coney released an official statement saying that Hillary Clinton has been cleared and they did not change any conclusions that were expressed in July with respect to Secretary Clinton. This announcement removed clouds of suspicion around her campaign and potential Presidency.

According to latest polls from WSJ/NBC, Clinton is still ahead in the election but Trump is with all the momentum. She is ahead 44 percent to 40 percent in the poll but that's down from 48 percent to 37 percent in a poll from the same firm in mid-October. The survey has Johnson at 6 percent and Stein at 1 percent.

The Bank of Japan kept its benchmark interest rate on hold at the 2-day monetary policy meeting concluded last Tuesday, extending the time limit for achieving its long-drawn inflation target of around 2 percent. This followed the last month’s major overhaul that saw policymakers shift the focus from quantitative easing to interest rate targeting.

The unchanged policy decision was made by a majority 7-2 vote, holding the interest rate at -0.1 percent, since January this year, pledging to maintain the 10-year JGB yield target at around zero percent, with holdings rising at an annual pace of around 80 trillion yen.

In a quarterly review of its forecasts, the BoJ cut its inflation forecasts for the next fiscal year ending in March 2018 to 1.5 percent from 1.7 percent in July. Meanwhile, Japan's economy expanded for the second straight quarter in April-June but many expect growth to remain modest for the rest of this year, with exports and output weak on sluggish global demand.

Meanwhile, the benchmark Nikkei 225 closes up 1.61 percent at 17,177.21 and the broader Topix index closed 1.17 percent higher to 1,362.80 points.