October 25, 2018 / 7:14 AM / 22 days ago

JGBs futures hit three-month high as equity selloff accelerates

TOKYO, Oct 25 (Reuters) - Japanese government bond prices rose on Thursday, with the benchmark futures hitting a three-month high, on safety bids as a selloff in global equities gathered momentum on worries about corporate earnings and a Sino-U.S. trade war.

Ten-year JGB futures gained 0.21 point to 150.65, their highest level since July 31, with a trading volume of 38,347 lots.

An auction of 2.1 trillion yen two-year JGBs on Thursday drew solid demand, with bid-to-cover rising to 5.31 from 4.37 in the previous auction. The tail, or the gap between the lowest and average prices, shrank to 0.01 from 0.05.

The benchmark cash 10-year JGB yield fell 2 basis points to 0.110 percent, its lowest level in a month, while the 20-year yield fell 2.5 basis points to 0.635 percent.

The yield curve bull-flattened, led by super-long JGBs, with the 30-year JGB yield dropping 3.5 basis points to 0.860 percent and the 40-year yield falling 4 basis points to 1.020 percent.

The market was propped up by caution due to the ongoing global equity rout.

On Wall Street, the Nasdaq plunged 4.4 percent overnight in its biggest one-day percentage decline since August of 2011, while Japan’s Nikkei average tumbled 3.7 percent to a six-month trough on Thursday. (Reporting by Tokyo Markets Team; Editing by Sunil Nair)

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