SINGAPORE, July 2 (Reuters) - Japanese government bonds
rose slightly on Wednesday, pushing yields at the long-end of
the curve down, as protracted trade negotiations and uncertainty
around upcoming national elections spurred a bid for safe-haven
bonds.
The September contract, the main contract for JGB
futures, was down 5 sen at 139.17 yen.
The 30-year JGB yield fell 0.5 basis point
(bp) to 2.885%.
Support for Japanese Prime Minister Shigeru Ishiba's
government has slipped ahead of key upper house elections slated
for July 20, an NHK poll showed on Monday. Ishiba's cash handout
plan to help the public deal with inflation has failed to
impress voters.
Japanese investors are also dealing with the worry the
country has yet to secure a trade deal with the United States
after nearly three months of negotiations.
Tokyo has been scrambling to convince the U.S. to scrap a
25% tariff on Japanese cars and a 24% reciprocal tariff on other
Japanese imports. The reciprocal tariff has been paused until
July 9, but President Donald Trump has indicated a deal may not
happen by then.
Trump has also suggested he could impose a tariff of "30% or
35% or whatever the number is that we determine" on imports from
Japan - well above the tariff rate he announced on April 2 and
then later paused.
"I get the impression that the market is starting to pay
attention to the reality that the outlook for Japan-U.S. trade
negotiations has become even more uncertain, with concrete
numbers now being released," said Daisuke Uno, chief strategist
at Sumitomo Mitsui Banking Corporation.
The 10-year JGB yield rose 0.5 bp to 1.415%
while 10-year interest rate swaps were at 1.25%.
They have traded in a wide range between 0.8% and 1.4% this
year.
Traders said some of the buying of long-term bonds was led
by short-covering ahead of a 30-year bond auction scheduled for
Thursday.
At the short end of the rates markets, the overnight call
money rate was quoted at 0.477% and the one-month
Japanese yen treasury bill fell 0.4 bp to 0.454%.
The 20-year JGB yield fell 0.5 bp to 2.315%.