JGBs jump on virus fears, medium-term papers gain most on BOJ speculation

TOKYO, Feb 25 (Reuters) – Japanese government bond prices soared on Tuesday as the coronavirus epidemic spread well beyond Asia, further eroding optimism about the global economic outlook.

Benchmark 10-year JGB futures rose 0.58 point to 153.48, posting the biggest daily gain for a benchmark contract since the Bank of Japan started the yield curve control policy in 2016.

The yield on the benchmark 10-year cash JGBs fell 4 basis points (bps) to minus 0.105%, the lowest since late November.

The five-year yield declined 5 bps to minus 0.215% as a plunge in five-year U.S. notes on epidemic fears made the Japanese paper relatively attractive.

The two-year JGB yield fell 3.5 bps to minus 0.200%.

Falls in short- to medium-term yields also reflected rising expectations that the Bank of Japan may need to cut interest rates deeper into negative levels to deal with a probable economic downturn due to the coronavirus epidemic.

At the longer end of the market, the 20-year JGB yield fell 1.5 bps to 0.205%, a 3-1/2-month low, while the 30-year JGB yield declined 1 bp to 0.330%, having fallen to a five-month low of 0.325% at one point.

The 40-year JGB yield fell 1 bp to 0.350%. (Reporting by Tokyo Markets Team; Editing by Subhranshu Sahu)

Source: Read Full Article