JGBs gain, curve flattens on emerging market concerns, BOJ buying

Sun Feb 2, 2014 10:23pm EST

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TOKYO, Feb 3 (IFR) - JGB prices rose on Monday, with the yield curve flattening on buying by pension funds and the Bank of Japan on the back of continued concerns over emerging markets.

The current 20-year yield dropped 2.0 basis points to 1.440 percent, matching a 5 1/2-month low touched in October.

On top of buying by pension funds, the BOJ bought super-long maturities as part of its asset purchase programme, surprising traders who did not expect the central bank to buy those maturities on Monday.

The benchmark 10-year yield fell 1.0 basis point to 0.610 percent, though buying in this tenor was tempered by caution ahead of a 10-year JGB auction on Tuesday.

The market took its cue from fall in Japanese shares, and a rise in U.S. Treasuries on Friday, driven by worries that emerging markets will remain under pressure due to continued cut backs in U.S. monetary stimulus and a slowdown in China.

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