JAPAN RATES WEEKLY: JGBs Rally as Brexit Risks Spur Haven Demand
(Bloomberg) -- Japan’s sovereign bond curve flattens as the yields for the 10-year and 20-year debt reach record low, tracking U.K. gilts and Germany bunds on safe haven demands ahead of the Brexit vote.
- 10-year yield hits record low of -0.155%, and 20-year yield marks record low of 0.185%
- Click here for weekly change in yield curve and here for market snapshot
- BOJ to hold monetary policy meeting on June 15-16
- BOJ Deputy Nakaso said on Thursday BOJ monitoring liquidity, functioning of JGB market and will ease if necessary to hit 2% price target; negative rate policy has larger merits despite side effects
- BTMU considers quitting as one of 22 primary dealers, people familiar with the matter said in story published June 8
- 30-year bond auction drew strongest demand in three months on Tuesday due to large bond redemptions this month; 5-year bond auction drew highest coverage ratio since Aug. 2014 on expectations about future BOJ easing
- Japanese rating agency R&I cut Japan outlook to negative on June 6; affirms AA+ rating
- Ministry of Finance to sell 12-mo. bills on June 14, 3-mo. bills on June 15, and to hold enhanced-liquidity auction for bonds with remaining 20 to 40 years
- MassMutual Life Insurance (Satoshi Shimamura, head of rates and markets at investment strategy department)
- JGBs yield could decline on BOJ expectations, and uncertainty surrounding U.K. EU referendum vote on back of reinvestments from large debt redemption this month
- Sees 10-year yield trading -0.175% to -0.100% for coming week
- PineBridge Investments Japan (Tadashi Matsukawa, head of fixed-income investment)
- Regardless of BOJ decision, JGBs could rally as yen could rise on BOJ’s inaction
- Uncertainty of U.K. EU referendum vote spurs risk-off sentiment in market
- JPMorgan Asset Management (Genji Tsukatani, fund manager)
- JGBs yield may slip further to record low for coming week
- Focuses on Fed’s stance to future rate hike possibility
- NOTE: JGBs worth about 18t yen ($165b) will mature this month (excluding T-bills, linkers and floating bond), with large proportion June 20, according to data compiled by Bloomberg
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Genji Tsukatani (JPMorgan Asset Management Japan Ltd)
Satoshi Shimamura (Massachusetts Mutual Life Insurance Co)
Tadashi Matsukawa (PineBridge Investments Holdings US LLC)
Topics BFW Japan Rates Analyst Wrap
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