News Column

Japanese Gov't Bonds Fall on Deal to Avert US Fiscal Cliff

Jan. 4, 2013

Japanese government bonds lost ground in Tokyo Friday, the first trading day of 2013, with a key futures contract hitting a seven-month low, as stock prices soared thanks to a deal to avert the so-called fiscal cliff in the United States.

The lead March futures contract on 10-year JGBs fell as low as 143.20 on the Tokyo Stock Exchange before closing at 143.32, down from 143.65 on Dec. 28, the final trading day of 2012. Turnover grew to 26,847 contracts from 24,197.

In late interdealer trading in cash JGBs, the yield on the latest 326th 10-year issue with a 0.7 pct coupon stood at 0.835 pct, a benchmark 10-year JGB yield level unseen since Sept. 13, 2012.

JGBs came under selling pressure after U.S. Congress' adoption of a bill to avoid the fiscal cliff impasse, or a combination of spending cuts and tax hikes, had helped boost stock prices and tumble bond prices in the United States.

The market is experiencing "the unwinding of risk aversion," an official of a major securities house said.

An official of a bank-affiliated brokerage, however, pointed to purchases on dips at JGB yields of over 0.8 pct.END



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