JGB prices ease, data shows Japan inflation accelerating

Thu Nov 28, 2013 9:51pm EST

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TOKYO, Nov 29 (IFR) - Japanese government bond prices dipped on Friday, with the 10-year yield on track to end three straight days of decline, while data showed Japan's consumer inflation accelerated to a five-year high in October.

The 10-year yield was up 1 basis point at 0.610 percent after declining 4 basis points in the previous three sessions, while 10-year JGB futures eased 4 ticks to 145.05.

Relatively good two-way flow was seen in the seven- to 13-year sectors among several commercial banks, while superlong JGBs extended their earlier losses steadily into the morning close.

The 20-year yield added 2 basis points to 1.495 percent, while the 30-year yield was up 0.5 basis point at 1.630 percent.

A further depreciation of the yen against the dollar and the euro, and resilient Tokyo stocks also had some negative impact on the JGBs.

The yen fell to a five-year trough of 139.705 to the euro and a six-month low of 102.61 to the dollar, while the Nikkei share benchmark was almost flat after hitting its highest closing level in nearly six years on Thursday.

Data on Friday also included encouraging signs an economic recovery was broadening and would extend into 2014, with factory output rising for a second straight month and the availability of jobs at the highest in nearly six years.

That bodes well for Prime Minister Shinzo Abe's goal of reviving the world's third-largest economy and casting off 15 years of deflation through his "Abenomics" stimulus, as rising output and demand for workers should help increase wages and spending.

Indeed, Bank of Japan Governor Haruhiko Kuroda reiterated his view on Friday that inflation would reach a target of 2 percent in coming years -- a goal that has been openly challenged by a one-third of his board.

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