Updated April 22nd, 2024 at 11:00 IST

JGB yields rebound as tensions in Middle East ease

Last Friday, JGB yields had plummeted across the curve amid a surge in safe-haven bids. However, on Monday, they rebounded as geopolitical tensions subsided.

Reported by: Business Desk
JGB | Image:Shutterstock
Advertisement

JGB bond yields: Japanese government bond (JGB) yields experienced an uptick on Monday as concerns over escalating tensions in the Middle East abated. The reassurance from Iran, downplaying an Israeli drone attack within its borders and signaling no plans for retaliation, aimed to mitigate fears of a wider conflict in the region.

Last Friday, JGB yields had plummeted across the curve amid a surge in safe-haven bids. However, on Monday, they rebounded as geopolitical tensions subsided.

Advertisement

The 10-year JGB yield rose by 5 basis points to 0.880 per cent, following a decline to a one-week low of 0.825 per cent on Friday. Correspondingly, benchmark 10-year JGB futures fell by 0.48 yen to 144.19 yen.

As the Bank of Japan's (BOJ) April meeting approaches, BOJ Governor Kazuo Ueda hinted on Friday that the central bank could raise interest rates if underlying inflation continues to rise. Ueda also mentioned the possibility of reducing the bank's extensive bond buying in the future.

Advertisement

Ryutaro Kimura, a fixed-income strategist at AXA Investment Managers, noted that while Ueda's comments echoed previous statements, they conveyed a more optimistic outlook. This sentiment underscored the BOJ's focus on potential rate hikes in the near term, increasing speculation about a hike in July.

However, Kimura stressed that Monday's movement in yields primarily stemmed from easing geopolitical concerns rather than a direct reaction to Ueda's remarks. Market consensus still leans toward another rate hike in October.

Advertisement

The two-year JGB yield climbed by 2 basis points to 0.275 per cent, while the five-year yield increased by 3.5 basis points to 0.485 per cent. On the superlong end, the 30-year JGB yield rose by 4 basis points to 1.920 per cent.

(With Reuters inputs.)

Advertisement

Published April 22nd, 2024 at 11:00 IST