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JGB 10-year yield hits 11-month high on Treasuries
By Shinichi Saoshiro
TOKYO, June 16 (Reuters) - The benchmark 10-year Japanese government bond yield hit an 11-month high on Monday, as a rise in Tokyo shares and a slide in U.S. Treasuries late last week prompted investors to sell government debt.
But losses in JGBs were limited after Bank of Japan Governor Masaaki Shirakawa on Friday allayed speculation that the central bank will hike interest rates in the coming months to contain inflation.
The BOJ chief said Japanese economic and price conditions differed from those in the United States and Europe, stressing that each nation should decide monetary policy based on its own conditions. [ID:nTKF003210].
Shirakawa's remarks triggered short covering in JGB futures in early trade, traders said. But the rise in the futures quickly lost momentum once the unwinding of positions ran its course.
"Short covering is having a stronger impact on euroyen futures," said Tatsuo Ichikawa, fixed-income strategist for ABN AMRO Securities. Positions previously built up in anticipation of an early BOJ hike are being unwound, said Ichikawa.
In choppy trading, JGB futures edged down 0.05 point to 132.30 2JGBv1, staying near an 11-month low of 132.05 struck on Friday. The lead futures contract rose as high as 132.57 in early trade.
The benchmark 10-year JGB yield rose 2 basis points to 1.885 percent, after briefly touching a fresh 11-month high of 1.890 percent JP10YTN=JBTC.
The two-year yield, the most sensitive to any changes in the monetary policy outlook, fell 3.5 basis points to 0.975 percent JP2YTN=JBTC.
The lead three-month euroyen futures contract rose 4 basis points to 98.775 JEYv1.
The BOJ kept interest rates steady at 0.50 percent on Friday, as widely expected. The central bank has left monetary policy unchanged since raising the overnight call rate target from 0.25 percent in February last year.
U.S. Treasuries fell Friday on persisting concerns that the Federal Reserve will have to start raising rates in coming months to fight inflation. [US/]
Tokyo's Nikkei share average .N225 was up 1.4 percent on Monday. (Editing by Chris Gallagher)
