December 28, 2012 / 2:45 AM / in 5 years

JGBs steady, with benchmark yields at 3-month high

TOKYO, Dec 28 (Reuters) - Benchmark Japanese government
bonds were steady on the last trading day of 2012 with their
yields at a three-month high hit in the previous session, on
expectations that the new year will bring more official stimulus
    * Markets here will be closed for the long New Year's
holiday in Japan, and will reopen on Jan. 4.
    * "A lot of people are off already, having closed out their
positions for the year. When markets open a week from today, the
big question will be what happened with the U.S. 'fiscal cliff,'
and how U.S. debt prices reacted to the developments," said a
fixed-income fund manager at a European asset management firm in
    * Republican leaders in the House of Representatives told
their members to be back in Washington from the Christmas
holiday break on Sunday in case they need to vote on budget
measures, leaving the door open to a last-minute solution to the
U.S. budget impasse. 
    * The 10-year JGB yield was flat at 0.800
percent, its highest level since Sept. 21. Earlier Friday, it
slipped to 0.795 percent. 
    Benchmark yields dropped as low as 0.685 percent on Dec. 6,
their lowest since June 2003. They finished 2011 at 0.980
    * The benchmark 10-year JGB futures contract ended
morning trade up 0.09 point at 143.59.
    * Yields on 20-year bonds edged up half a
basis points to 1.765 percent, their highest since April 6. 
    * The market shrugged off economic data released on Friday
morning, though it bolstered the case that more monetary
stimulus steps lie ahead from the Bank of Japan. 
    Industrial output fell 1.7 percent in November, more than
triple the median market forecast for a 0.5 percent decline.

    * The BOJ delivered further monetary stimulus last week in
response to intensifying pressure from new Prime Minister Shinzo
Abe, whose government was sworn in two days ago. 
    * Benchmark JGBs have lost 6.9 percent in 2012 in
dollar-based terms, according to Reuters data. Part of that is
due to the weakness of the Japanese yen, which is on track to
lose more than 12 percent against the dollar this year for its
worse performance since 2005.
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