Japanese Government bonds gain as spike in coronavirus cases boosts safe-haven demand

TOKYO (Reuters): Japanese Government bond prices rose on Friday as a spike in new coronavirus cases increased the appeal of the safe-haven debt.

Benchmark 10-year JGB futures added 0.2 point to 151.96, with a trading volume of 18,936 lots, while the 10-year JGB yield fell 2 basis points to 0.020%.

Coronavirus cases have been rising sharply in Tokyo, partly due to increased testing among nightlife workers. Japan’s capital confirmed 124 new cases on Friday, up from 107 the day before. Investors also worried over a surge in new infections elsewhere, with the United States reporting more than 55,000 cases on Thursday, a new daily global record for the pandemic.

Yields on long-dated maturities edged away from multi-month highs touched this week. The 20-year JGB yield dropped 2 basis points to 0.420%. The 30-year JGB yield and the 40-year JGB yield slipped 2.5 basis points each to 0.620% and 0.655%, respectively.

At the shorter end of the curve, the two-year JGB yield inched down half a basis point to minus 0.145%, while the five-year yield fell 1 basis point to minus 0.105%. The Bank of Japan increased the size of its buying of one-to-three-year JGBs to 420 billion yen from 340 billion yen, but maintained its purchases of three-to-five year and 10-25 year maturities at 350 billion yen and 120 billion yen.