JGB yields fall amid weak demand in domestic auction

BY Reuters | TREASURY | 05/12/22 01:17 AM EDT

TOKYO, May 12 (Reuters) - Japan's government bond yields on Thursday tracked overnight fall in U.S. Treasury yields amid weak demand for a domestic 30-year bond auction.

The 20-year JGB yield fell 0.5 basis point to 0.765%. The 30-year JGB yield fell 0.5 basis point to 1.015%.

The 10-year JGB yield was flat at 0.245%.

Investors found the Ministry of Finance's auction for 30-year bonds weak, even as its bid-to-cover ratio of 3.08 was almost unchanged from 3.05 at the previous auction.

"The results were weak, as there was a clear gap between investors who made active and cautions bids," said a market participant at a domestic brokerage.

U.S. Treasury yields fell overnight, after U.S. consumer price data showed the pace of inflation slowed in April, though not enough to ease concerns that the Federal Reserve's agenda to cool rising prices may induce a recession.

The two-year JGBs were not traded and the yield remained at -0.050%.

The five-year yield fell 0.5 basis point to 0.010%.

The 40-year JGB yield rose 0.5 basis point to 1.135%.

Benchmark 10-year JGB futures rose 0.12 point to 149.44, with a trading volume of 13,832 lots. (Reporting by Tokyo markets team; editing by Uttaresh.V)

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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