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TREASURIES-U.S. 10-year yield hits 3-mth low on BOJ's radical stimulus
April 5, 2013 / 5:56 AM / in 5 years

TREASURIES-U.S. 10-year yield hits 3-mth low on BOJ's radical stimulus

SINGAPORE, April 5 (Reuters) - The U.S. 10-year Treasury yield touched a three-month low on Friday after the Bank of Japan’s radical stimulus campaign stirred speculation of a potential rise in Japanese investor demand for overseas debt.

* The 10-year Treasury yield touched a low of about 1.744 percent earlier on Friday, its lowest level since late December.

Ten-year Treasuries later pared their gains, however, and the their yield last stood at 1.764 percent, little changed from late U.S. trade on Thursday.

* 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 years.

Longer-end JGB yields had 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 BOJ’s radical monetary expansion plans and an earlier drop in JGB yields had stirred speculation that Japanese investor demand for higher-yielding overseas assets may increase.

Such talk had buoyed demand for some U.S. and European assets on Thursday, said Tomoaki Shishido, rate analyst for Nomura Securities in Tokyo.

“The things that rose were all ones that Japanese players tend to buy, such as Treasuries and MBS, while French government bonds outperformed in Europe,” Shishido said, adding those gains had been due to speculative demand rather than actual buying by Japanese investors.

* 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.

But a few analysts have downwardly revised their forecasts on March payrolls growth toward the 150,000 figure after surprisingly weak March readings in the ADP private jobs report and job component in the Institute for Supply Management’s services industry survey on Wednesday.

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