* 10-yr futures rise, touch intraday high after Obama win
* 10-yr, 30-yr yield spread hits highest since March 2008
By Lisa Twaronite
TOKYO, Nov 7 Benchmark Japanese government bonds
were steady on Wednesday after U.S. President Barack Obama won a
second term in office in line with expectations, but the
superlong sector lagged on concerns over Japan's fiscal
Obama beat Republican challenger Mitt Romney after a long
and bitter campaign, in a victory that was generally viewed as
supportive for the bond market.
JGB futures hit their intraday high around the time the yen
jumped against the dollar as U.S. television networks projected
Obama's win. His re-election made it more likely that the U.S.
Federal Reserve will maintain its commitment to easy policy
Ten-year JGB futures ended up 0.03 point at 144.33,
solidly above their 5-day moving average as well as their 20-day
moving average, now at 144.20 and 144.17 respectively, and
moving back toward a three-month high of 144.47 touched last
week. They hit an intraday high of 144.43.
Volume was a moderate 31,678 contracts, up from 20,817 in
the previous session and recovering from Monday's four-month low
of 11,992 contracts.
The 10-year yield added half a basis point to
0.760 percent, up from 0.755 percent after the projection of the
election results, which was flat with their close on Tuesday.
"Generally, it was expected that Obama's victory would be
supportive for bonds and could lead to selling of the dollar and
equities," said Maki Shimizu, senior strategist at Citigroup
Global Markets Japan.
"The U.S. election will not change the ongoing trend in
Japan, meaning the bond market here will likely stay in
consolidation, with the 10-year supported by its carry
advantage, while demand for the superlong tenor will be weaker
because their lack of absolute yield levels as well as fiscal
policies going forward and political risks," she said.
On Japan's own political front, main opposition leader
Shinzo Abe said on Wednesday that the Bank of Japan should
continue monetary easing until it achieved 3 percent inflation,
signalling the central bank could come under more political
pressure after the next general election.
The BOJ set a 1 percent inflation target in February and has
boosted its asset-buying programme four times this year, most
recently last week.
Abe's Liberal Democratic Party (LDP) has been pressing Prime
Minister Yoshihiko Noda to call an early election.
"With the event risk of the U.S. election over, the JGB
market will turn some of its attention back to domestic politics
again, with the timing of the election in focus," said a fixed
income fund manager at a Japanese asset management firm.
"Domestic fiscal and political concerns will continue to
weigh on longer maturities," he added.
The yield curve steepened slightly as the superlong sector
underperformed. Yields on 30-year bonds added 1.5
basis points to 1.950 percent, while yields on 20-year debt
rose 1 basis point to 1.690 percent.
The spread between 10-year and 30-year yields rose to 1.19
percentage points, matching a level hit last month on a
last-traded basis, which was its widest since March 2008.