Stimulus Check – JGB yield curve flattens after Fed’s Powell signals no rush to taper
TOKYO, July 29 (Reuters) – The yield curve on Japanese government bonds (JGBs) flattened on Thursday as short-dated JGB yields firmed and longer-term ones declined, following Federal Reserve Chair Jerome Powell’s views that signalled no hurry to taper monetary stimulus.
Yields on two-, five- and 10-year JGBs rose 0.5 basis point to minus 0.135%, minus 0.125% and 0.015%, respectively.
The 20-year JGB yield was flat at 0.395%. Yields on 30-year bonds fell 0.5 basis point to 0.635%, while 40-year yields slipped by the same margin to 0.725%.
Powell said on Wednesday the U.S. job market still had “some ground to cover” before it would be time to pull back from the economic support the U.S. central bank put in place.
“The contents of Powell’s news conference were interpreted as dovish by the market,” said SBI Securities strategist Eiji Douke.
“There is little scope for 10-year JGB yields to fall further. So, some buying should shift to 20-year JGBs.”
Benchmark 10-year JGB futures fell 0.03 point to 152.32, with a trading volume of 13,169 lots.
An auction of new two-year paper was smooth, but failed to impact the wider market. (Reporting by Tokyo markets team; editing by Uttaresh.V)