BoE likely to maintain guidance for gradually higher rates as long as Brexit has not been clarified, says DNB Markets
India unlikely to witness recovery in consumption or investment growth owing to sluggish demand, says ANZ research
EM Asian currencies likely to advance if US and China make concrete progress in renewed trade negotiations, says Scotiabank
New Zealand’s annual current account deficit narrows in Q2, net international liability position widens
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Government bonds likely to benefit less from ‘safe haven’ inflows going forward due to worries over valuation and volatility, says DNB Markets
JGBs jump on fears of global economic downturn; BoJ likely to ease further
The Japanese government bonds jumped Thursday on increased expectations the Bank of Japan (BoJ) will further ease monetary policy, on rising fears of a global economic downturn, with the U.S. 2s10s Treasury yield curve barely 2 basis points away from an inversion.
The yield on the benchmark 10-year JGB note, which moves inversely to its price, plunged 23-1/2 basis points to -0.234 percent, the yield on the long-term 30-year suffered 4-1/2 basis points to 0.155 percent and the yield on short-term 2-year slumped nearly 28 basis points to -0.279 percent by 05:20GMT.
Market sentiment is increasingly brittle with investors seemingly latching on 2nd tier data and reacting disproportionately (although the US 2/10 inversion may have triggered a technical/algo-related response), OCBC Treasury Research reported.
Going ahead, with global bond markets essentially throwing in the towel (i.e., inferring that central banks are behind the curve), fears of a global recession (note that base metals, especially copper, continue to be in the doldrums) may continue to dictate price action – expect implicit support for haven currencies to persist, while cyclicals (and EM/Asia) may to continue to fade against the USD, the report added.
Meanwhile, the Nikkei 225 index slumped -1.36 percent to 20,374.00 by 05:25GMT.