Halister News

(Bloomberg) -- Investors may buy Japanese sovereign bonds even without fresh news out of G-7 summit as the communique highlighted downside risks to global economy, according to MassMutual Life Insurance.

• Expectation for BOJ easing remains intact as G-7 emphasize downside risk to global economy, Satoshi Shimamura, head of rates and markets at the investment strategy department, says in interview
• Main focus next week will be fiscal measures including possible delay to sales-tax hike
• Fiscal spending and delaying sales tax hike may be neutral for Japan’s government bonds as increased issuance of JGBs may be offset by BOJ’s bond purchase
• JGBs yield may decline gradually under tight supply/demand condition based on BOJ’s debt purchase along with duration extension demands by index investors
• 10-year govt bonds auction on June 2 may go smoothly because of new issuance in June
• Expects 10-year yield may trade -0.14% to -0.09% range for coming week
• 5-year yield drops 0.5 bp to -0.230%, 10-year yield down 1 bp to -0.120% and 20-year yield falls 1 bp to 0.245%
• NOTE: Abe says will make decision on sales tax hike before summer election