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JGB yields deteriorate as Asian markets await to digest FOMC’s July meeting minutes; trade deal eyed

.The Japanese government bond yields deteriorated at close of morning session Thursday as Asian markets are yet to digest the FOMC July meeting minutes, released overnight amid ongoing global economic disturbances.

Wall street edged up, while the U.S. Treasuries suffered, with the 2s10s year yield curve briefly inverting again; hopes still remain high of a trade deal between the U.S. and China.

At close, the yield on the benchmark 10-year JGB note, which moves inversely to its price, slumped 5 basis points to -0.243 percent, the yield on the long-term 30-year hovered around 0.184 percent and the yield on short-term 2-year slipped 1-1/2 basis points to -0.305 percent.

FOMC minutes revealed that the Fed saw a policy easing as “a prudent step from a risk-management perspective” and “part of a recalibration…or mid-cycle adjustment”, but views were very mixed - a “couple of participants indicated they would have preferred a 50bp cut” whilst “several participants favoured maintaining” the same rate, OCBC Treasury Research reported.

Trump said US will “probably” make a deal with China and “the only problem we have is Jay Powell and the Fed”. Elsewhere, Germany sold EUR824b 10-year bunds at a yield of -0.11 percent amid weak demand, while French officials opined that a no-deal Brexit is the most likely scenario, the report added.

Meanwhile, the Nikkei 225 index closed flat at 20,614.00

By Debarati Bir
  • Market Data
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