LONDON, April 5 U.S. 10-year Treasury debt
yields hit their lowest level in three months on Friday after
the Bank of Japan's aggressive stimulus plan stirred speculation
of a rise in Japanese investor demand for foreign debt.
The talk also spurred a rally in euro zone debt carrying
higher returns than the region's benchmark German bonds but also
with high credit ratings, driving Dutch, Belgian, French and
Austrian yields to record lows.
Analysts said the Treasuries market was also supported by
some nervousness over the U.S. non-farm payrolls number later in
the day, after a private labour market report and ISM
manufacturing and services figures this week undershot
The 10-year T-note yield fell as low as 1.744
percent earlier on Friday, its lowest level since late December
before bouncing to last trade at 1.768 percent, little changed
from late U.S. trade on Thursday.
The U.S. 30-year T-bond outperformed on the curve, pushing
the yield to 2.966 percent, its lowest since early
January, with traders citing some buying from pension funds.
"We're seeing decent volumes in (the) cash (market) today
and that's why yields pushed lower but we're not seeing the big
flows," a trader said.
"There's speculation of whether peripheral markets in the
euro zone or our U.S. dollar market will benefit from the BOJ
story," he said.
The 10-year Treasury yield had dropped by about 5 basis
points on Thursday, as Treasuries received a boost after the BOJ
announced plans for massive stimulus to arrest deflation, and
pledged to double its Japanese government bond holdings in two
Longer-end JGB yields slid earlier on Friday, with the
10-year JGB yield hitting a record low of 0.315 percent
at one point. The 10-year JGB yield later
rebounded sharply as investors locked in gains, and last stood
at 0.515 percent.
Analysts said the monetary expansion plans and an earlier
drop in JGB yields had stirred speculation that Japanese
investor demand for higher-yielding overseas assets may
"The things that rose were all ones that Japanese players
tend to buy, such as Treasuries and MBS (mortgage-backed
securities), while French government bonds outperformed in
Europe," said Tomoaki Shishido, rate analyst for Nomura
Securities in Tokyo.
Some of the earlier activity in the market fizzled out as
the near-term focus turned to U.S. jobs data due later on
Friday. Employers likely added 200,000 jobs to their payrolls
last month, according to a Reuters poll taken before the ADP
private jobs report on Wednesday.
Some analysts have cut their forecasts on March payrolls
growth toward 150,000 after surprisingly weak March
readings in the ADP report and job component in the Institute
for Supply Management's services industry survey on Wednesday.