JGBs slide due to fall in Treasuries, Nikkei rise
TOKYO, May 23 (Reuters) - Japanese government bond futures fell on Wednesday, dented by falls in U.S. Treasuries and a rise in Tokyo share prices as well as wariness about an expected rate rise by the Bank of Japan later this year.
Comments by Bank of Japan board member Atsushi Mizuno reported by Jiji news agency on Tuesday were one factor behind the weakness in JGBs, said Naomi Hasegawa, a senior fixed income strategist for Mitsubishi UFJ Securities.
"Mizuno's comments have weighed on short-term bonds, and Treasury yields rose to 4.8 percent, so sentiment isn't very good," Hasegawa said.
Despite such negative factors, however, 10-year JGB yields were still trading within the 1.6 to 1.7 percent range that has held over the past two months.
"It doesn't seem likely yields will suddenly rise beyond recent ranges," Hasegawa said, adding that investor demand for JGBs was still solid.
June 10-year JGB futures fell 0.33 point to 133.96 2JGBv1 as of 0058 GMT, edging close to a one-month low.
The benchmark 10-year JGB yield rose 3.0 basis points to 1.665 percent JP10YTN=JBTC. The Nikkei share average .N225 rose 0.50 percent in early trade.
U.S. Treasuries fell on Tuesday, with benchmark yields posting 3-½ month highs, on a combination of factors including weaker euro zone debt and supply-related hedging.
JGBs had trimmed some gains in the previous session on the remarks by the Bank of Japan's Mizuno.
Jiji quoted Mizuno as saying that while he had no fixed idea on when the central bank should raise interest rates, the so-called "mid-term review" of the BOJ's half-yearly economic outlook report in July could be a good opportunity.
Wariness among investors about the timing of the BOJ's next interest rate hike was keeping their focus on upcoming data, as the BOJ has said it will conduct monetary policy in line with economic fundamentals.
Many market players think the earliest the BOJ might raise interest rates to 0.75 percent from 0.50 percent is in August.
