JGBs skid in resemblance to U.S. Treasuries, weak demand at 5-year auction

The Japanese government bonds skid Thursday on the back of falling U.S. Treasuries, after comments by the Federal Reserve Chair Janet Yellen raised chances of an interest rate hike at the monetary policy meeting scheduled to be held on March 14-15. Also, weak investor demand at the 5-year auction held Wednesday weighed on bond prices, pushing the yields to multi-month highs.

The benchmark 10-year bond yield, which moves inversely to its price, rose 1-1/2 basis points to 0.09 percent, while the long-term 30-year bond yields hovered around 0.86 percent while the yield on the short-term 2-year note jumped 2-1/2 basis points to -0.26 percent by 06:30 GMT.

Recent comments from the Federal Reserve Chair Janet Yellen, specifying that a March rate hike is definitely on the cards, if the economy holds momentum, added to the rise in market expectations and investors have quite already priced in for a rate hike this month. This further, led to a surge in bond yields, pushing prices to record lows.

The auction attracted weak investor demand as the five-year bonds remained expensive. Further, the bid-to-cover ratio, a gauge of demand, at Thursday's JPY2.4 trillion (USD20.97 billion) 5-year auction slipped to 2.86 from 4.26 at the previous sale in February.

Meanwhile, Japan’s Nikkei 225 closed 0.31 percent higher at 19,313, while at 06:00GMT, the FxWirePro's Hourly Yen Strength Index remained neutral at -41.04 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex