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JGB yields rise as investors continue to shake off US recession fears
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JGB yields rise as investors continue to shake off US recession fears
Aug 18, 2024 9:20 PM

TOKYO, Aug 19 (Reuters) - Japanese government bond (JGB)

yields rose on Monday, as investors continued to unwind

positions taken up in the bond rally earlier this month amid

easing fears of a U.S. recession.

Investors had snapped up bonds at the start of the month

after a weak U.S. jobs report sparked widespread concerns of a

U.S. recession.

But a string of economic data last week has revived

expectations of a soft landing for the world's largest economy,

and JGB yields have marched up as slowdown fears fade.

With little other material to drive the market, Monday's

upward movement "basically seems like a reversal of the decline

in yields", said Keisuke Tsuruta, senior fixed income strategist

at Mitsubishi UFJ Morgan Stanley Securities.

The benchmark 10-year JGB yield was up 2.5

basis points (bps) at 0.895% as of 0357 GMT, while 10-year JGB

futures was down 0.23 yen at 144.6 yen.

There was some caution toward an auction of 20-year JGBs

scheduled for Tuesday, Tsuruta said.

The 20-year JGB yield rose 3 bps to 1.715%.

Later this week, Bank of Japan (BOJ) Governor Kazuo Ueda

will make an appearance before Japan's parliament to discuss the

bank's decision last month to raise interest rates.

The BOJ caught markets by surprise when it hiked rates to a

15-year high last month and signalled its readiness to raise

rates further.

That hawkish shift, along with U.S. hard landing concerns,

sent Japan's stock market plummeting on Aug. 5.

Given the market stress that followed the BOJ's July

decision, Ueda may be limited in what he can say about the

bank's rate path, said Mitsubishi UFJ Morgan Stanley's Tsuruta.

"I'm not expecting any particularly hawkish comments at this

point."

Elsewhere on the curve, the two-year JGB yield

ticked up 1 bp to 0.36%, while the five-year yield

rose 3 bps to 0.52%.

The 30-year JGB yield also climbed 3.5 bps to

2.075%.

(Reporting by Brigid Riley; Editing by Mrigank Dhaniwala)

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