Japanese government bond yields struggled to find direction on Monday, as 10-year Japanese government bond yields tracked US Treasury yields lower, as the market gauged the impact of recent yen weakness. on the Bank of Japan‘s policy outlook.
Ten-year Japanese government bond futures rose 0.19 basis points to 143.98 yen. The ten-year bond yield fell one basis point to 0.955 percent, after touching its highest level since Aug. 2 at 0.975 percent, on Friday.
US Treasury yields, which the Japanese government bond market tends to follow, fell on Friday, as the market stalled after a sharp rise in yields over the past month.
Hiroshi Namioka, chief strategist at T&D Asset Management, said the yen could also affect the direction of yields. “The results should really affect the exchange rate, but there seems to be a mechanism at work where the exchange rate affects the results,” said Namioka; Bond market participants focus on foreign exchange movements.
The Japanese currency briefly strengthened to 149.09 against the dollar on Monday, after touching 150.32 last week. The yen’s decline to 150 against the dollar has revived bets on another interest rate hike by the Bank of Japan in the coming months, putting further pressure on yields.
While market players expect the Bank of Japan to remain steady at its monetary policy meeting next week, expectations have been raised for an interest rate hike next December or January.
A narrow majority of economists polled by Reuters earlier this month called for interest rates to be unchanged until early next year. Investors are also focusing on the 20-year Japanese government bond auction on Thursday, followed by general elections for Japan’s House of Representatives on October 27.
The yield on 20-year Japanese government bonds settled Monday at 1.75 percent, while the yield on 30-year bonds rose two basis points to 2.165 percent. Two-year bond yields fell 0.5 basis points to 0.43 percent. The yield on a five-year bond fell to a base rate of 0.575 percent.
In the stock market, the Japanese Nikkei index fell in the end, on Monday, after a volatile session despite gains achieved by shares of companies related to technology, amid expectations of the season of industrial results and local elections.
Masahiro Ichikawa, chief analyst at Sumitomo Mitsui Asset Management, said: “Investors seem to be refraining from active trading in anticipation of these events. He said the failure of the ruling party to maintain a majority in the elections could “increase the situation of uncertainty and lead to more volatility in the market.”
The Nikkei index fell 0.07 percent to close at 38,954.60 points. The broader Topix index also fell 0.34 percent to 2,679.91 points.
Japanese technology stocks followed their American counterparts and kept the Nikkei index in the green zone for most of the day. US stocks jumped on Friday, led by Netflix business results and broader gains in the technology sector. The Dow Jones industrial average and Standard & Poor’s 500 index rose to unprecedented closing levels on Friday. The Nasdaq index also advanced thanks to the rise in technology stocks.
Japanese company Advantest, which manufactures chip test equipment, rose 2.7 percent, giving the benchmark index the biggest rise. Shares in Tokyo Electron, a major chip equipment maker, also rose 0.9 percent.
However, the performance of companies outside the technology sector weighed on the Nikkei index. It briefly fell to its lowest level since Oct. 4 at 38,775.59 points, as investors awaited corporate earnings announcements later in the week.
Of the 225 companies listed on the Nikkei index, only 74 stocks advanced, and 150 stocks declined, including Fast Retailing, which fell 0.8 percent.
2024-10-21 12:52:00
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