JGBs slide as stocks gain, Treasuries slip
TOKYO, Oct 26 (Reuters) - Japanese government bonds slid on Friday as investors took cues from a rise in share prices and an overnight fall in U.S. Treasuries, while economic data shed little light on the timing of the Bank of Japan's next interest rate rise.
Japan's nationwide core consumer price index fell 0.1 percent in September from a year earlier, government data showed on Friday, marking the eighth straight month of annual declines and matching the market's consensus forecast.
Industrial production fell 1.4 percent in September from the previous month, compared with forecasts for a 1.3 percent drop, a separate report showed.
Both indicators reinforced the widely held view the BOJ will keep interest rates at the current 0.5 percent for a while.
But investors found it difficult to trade on those figures as they did not give a clear picture about when the next BOJ rate rise will take place, said Naomi Hasegawa, senior fixed-income strategist at Mitsubishi UFJ Securities.
"Market players sold JGBs in reaction to higher share prices and weaker Treasuries," Hasegawa said. "Data on CPI and output did not have a large impact on the bond market."
December JGB 10-year futures fell 0.17 point to 136.02 2JGBv1, pulling away from a one-month high of 136.26 reached during the previous day's regular session. Futures had risen as high as 136.27 in Wednesday's evening session.
The benchmark 10-year yield rose 2 basis points to 1.600 percent JP10YTN=JBTC, staying above a one-month low of 1.555 percent struck earlier this week.
JGB prices have rallied in the past few weeks as lingering uncertainty over the outlook for global economic and market conditions has prompted investors to doubt the possibility of a BOJ interest rate rise this year.
The five-year yield JP5YTN=JBTC was up 2 basis points to 1.090 percent, while the two-year yield JP2YTN=JBTC edged up 1 basis point to 0.775 percent.
The Nikkei share average .N225 climed 0.6 percent in early trade.
Treasuries slipped on Thursday as U.S. stocks pared losses after a report quelled rumours that insurance giant American International Group would post a big investment write-down.
