TOKYO, March 18 Japanese government bonds gained
on Monday, pushing the benchmark 10-year JGB yield near 10-year
lows, after the euro zone stunned investors by forcing Cypriot
savers to take on some of the burden of the bailout of the
* The 10-year JGB yield fell 2.5 basis points to 0.590
percent, just above a 10-year low of 0.585
percent hit on March 4.
* In a radical departure from previous aid packages, euro
zone finance ministers demanded Cyprus savers forfeit a portion
of their deposits in return for a bailout, triggering a run at
cash points in the Mediterranean island.
* "Euro zone policymakers said Greece was an exception when
investors took a hit for their bond holding. But now we have a
cut in deposits. If you have two exceptions, they look more like
precedents," said Tohru Yamamoto, chief bond strategist at Daiwa
* "Investors' money is likely to shift back to Germany in
the euro zone again. It will be also hard to sell JGBs, even
though no one really wants to buy JGBs at such low yields," he
* JGBs were also helped by expectations that the Bank of
Japan's new leadership will implement more aggressive easing,
most likely by buying more, and longer-dated, JGBs.
* This week will see a change of guard at the Bank of Japan,
with Haruhiko Kuroda, a former top currency diplomatic who
advocates unconventional easing, succeeding the current chief
Masaaki Shirakawa on March 20.
* Many investors expect a Kuroda-led BOJ to announce fresh
easing steps at its first scheduled policy meeting on April 3-4.
* The 10-year JGB futures also gained 0.23 point to 145.42
, hitting a record high of 145.46 during the trade.
* The 20-year bond yield fell 3.5 basis points to 1.570