Japanese govt bonds close lower on conjecture that interest rates may rise soon |
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Published
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Wed, 09 May 2007 08:29
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TOKYO (XFN-ASIA) - Japanese government bond prices closed lower, investors having speculated that the GDP data due out next week will show that the economy was stronger than expected in the first quarter and so prompt the Bank of Japan to raise interest rates, dealers said.But uncertainty about the outcome of the meeting later today of the US Federal Reserve kept investors from reacting sharply to the selling incentives here, dealers said. Overnight, US Treasury bond prices rose on hopes of a cut in US interest rates.At the close of trading here, the yield on the benchmark 10-year bond was at 1.665 pct, up from 1.650 pct at the close yesterday.The yield on the two-year bond had risen to 0.860 pct from 0.850 pct and the yield on the lead five-year note had edged up to 1.235 pct from 1.215 pct.The yield on the bellwether 20-year bond had risen to 2.105 pct from 2.085 pct and the yield on the 30-year bond was at 2.325 pct, up from 2.305 pct.Bond prices move inversely to yields.The price of the June futures contract for the 10-year bond had slipped to 134.05 yen from 134.22 yen at the close yesterday.Dealers said that brokerage firms in particular had sold their debt holdings and futures contracts because they expected the talk of an increase soon in interest rates to dull investors' appetite for the new 10-year bonds that they had bought at the government auction yesterday.Naomi Hasegawa, senior strategist at Mitsubishi UFJ Securities, said: 'There seems to be speculation about a sooner-than-expected hike in interest rates behind the selling in the fixed-income market.'The yen's rise in foreign exchange trading during the morning session also fueled conjecture that an increase in interest rates may be imminent, dealers said.(1 usd = 119.81 yen)yumiko.nishitani@xfn.com
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Japanese govt bonds end morning lower on GDP, interest rate conjecture 