By Masayuki Kitano
TOKYO, Jan 22 (Reuters) - Lead 10-year Japanese government bond futures rallied on Friday on a flurry of short-covering, as share prices slid and the yen surged on jitters over U.S. proposals to limit financial risk-taking.
The lead March JGB futures contract rose 0.40 point, on track for its biggest one-day gain in more than seven weeks, with traders citing position unwinding, including buy-backs of futures sold for hedging purposes.
A focal point is whether the benchmark 10-year JGB yield will manage to break below 1.3 percent, which is the low for the 10-year yield so far in January, market players said.
'If the 10-year JGB yield falls below 1.3 percent and the 20-year yield drops below 2.1 percent and such levels become ceilings for those yields, that could help attract inflows of investor cash,' said Junji Kojima, senior deputy manager in Sompo Japan Insurance's global securities investment department.
Lead March 10-year JGB futures rose 0.40 point to 139.38 , after rising to as high as 139.46 earlier.
The fact that futures managed to rise above resistance at 139.40, the intraday high on several occasions this month, may signal a shift in trend, said a trader for a European brokerage
The benchmark 10-year JGB yield fell 3 basis points to 1.310 percent.
The 20-year JGB yield slipped 2 basis points to 2.115 percent .
Tokyo's Nikkei average shed 2.7 percent and the yen rose broadly after U.S. stocks slid on Thursday after President Barack Obama proposed tough restrictions on banks.
The proposals, which require congressional approval, would prevent banks or financial institutions that own banks from investing in, owning or sponsoring a hedge fund or private equity fund. The rules would also bar institutions from proprietary trading.
Uncertainty over whether the proposals will be passed and in what form could become an ongoing theme, market players said.
'One issue, of course, is whether they are really going to become law that easily,' said Kojima at Sompo Japan Insurance.
Traders said the gains in JGBs at this stage seemed to be led by position unwinding and short-term traders.
'I doubt that real money investors can make a decision to chase bonds higher, just based on what has happened yesterday and today,' said the trader for a European brokerage house.
(Editing by Michael Watson)
((masayuki.kitano@thomsonreuters.com; Reuters Messaging: masayuki.kitano.reuters.com@reuters.net; +81-3-6441-1872)) Keywords: MARKETS JAPAN JGB (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
TOKYO, Jan 22 (Reuters) - Lead 10-year Japanese government bond futures rallied on Friday on a flurry of short-covering, as share prices slid and the yen surged on jitters over U.S. proposals to limit financial risk-taking.
The lead March JGB futures contract rose 0.40 point, on track for its biggest one-day gain in more than seven weeks, with traders citing position unwinding, including buy-backs of futures sold for hedging purposes.
A focal point is whether the benchmark 10-year JGB yield will manage to break below 1.3 percent, which is the low for the 10-year yield so far in January, market players said.
'If the 10-year JGB yield falls below 1.3 percent and the 20-year yield drops below 2.1 percent and such levels become ceilings for those yields, that could help attract inflows of investor cash,' said Junji Kojima, senior deputy manager in Sompo Japan Insurance's global securities investment department.
Lead March 10-year JGB futures rose 0.40 point to 139.38 , after rising to as high as 139.46 earlier.
The fact that futures managed to rise above resistance at 139.40, the intraday high on several occasions this month, may signal a shift in trend, said a trader for a European brokerage
The benchmark 10-year JGB yield fell 3 basis points to 1.310 percent.
The 20-year JGB yield slipped 2 basis points to 2.115 percent .
Tokyo's Nikkei average shed 2.7 percent and the yen rose broadly after U.S. stocks slid on Thursday after President Barack Obama proposed tough restrictions on banks.
The proposals, which require congressional approval, would prevent banks or financial institutions that own banks from investing in, owning or sponsoring a hedge fund or private equity fund. The rules would also bar institutions from proprietary trading.
Uncertainty over whether the proposals will be passed and in what form could become an ongoing theme, market players said.
'One issue, of course, is whether they are really going to become law that easily,' said Kojima at Sompo Japan Insurance.
Traders said the gains in JGBs at this stage seemed to be led by position unwinding and short-term traders.
'I doubt that real money investors can make a decision to chase bonds higher, just based on what has happened yesterday and today,' said the trader for a European brokerage house.
(Editing by Michael Watson)
((masayuki.kitano@thomsonreuters.com; Reuters Messaging: masayuki.kitano.reuters.com@reuters.net; +81-3-6441-1872)) Keywords: MARKETS JAPAN JGB (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.