JGBs fall in line with U.S. Treasuries

BY Reuters | TREASURY | 10/23/20 01:36 AM EDT

TOKYO, Oct 23 (Reuters) - Japanese government bond prices fell on Friday, in line with overnight losses in U.S. Treasuries, on hopes that lawmakers are close to striking a deal on new fiscal stimulus.

Benchmark 10-year JGB futures fell 0.15 point to 151.83, having hit its two-week low in early trade, with a trading volume of 21,492 lots.

The 10-year JGB yield, meanwhile, gained half a basis point to 0.035%.

Yields in the super-long zone marked their highest levels since Oct. 14.

The 20-year JGB yield added half a basis point to 0.410%.

The 30-year JGB yield rose 1 basis point to 0.640%, while the 40-year JGB yield climbed 1.5 basis points to 0.670%.

At the shorter end of the curve, the two-year JGB yield inched up half a basis point to minus 0.135%.

The five-year yield rose 1 basis point to minus 0.095%, after hitting its highest level unseen since Sept. 8.

Overnight, benchmark U.S. Treasury yields rose to four-month high and the yield curve steepened as U.S. House Speaker Nancy Pelosi said negotiators were making progress in talks with the Trump administration for another round of COVID-19 aid and that legislation could be hammered out "pretty soon." (Reporting by Tokyo Markets Team; Editing by Rashmi Aich)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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