JGBs edge down as stocks rally on hopes of virus slowdown

TOKYO, April 6 (Reuters) – Japanese government bond prices dropped on Monday as stock markets rallied on hopes of slowdown in the coronavirus pandemic in some parts of the world as well as tougher steps from Tokyo to tackle the virus.

Benchmark 10-year JGB futures fell 0.44 point, the biggest fall in three weeks, to 152.17, though trading volume was extremely thin at 8,994 lots, only about a third of the average over the past year.

Traders sold the futures as both domestic and global shares rallied on Monday. The death toll from the coronavirus slowed across major European nations including France and Italy while Japanese media reported Prime Minister Shinzo Abe will declare a state of emergency as early as Tuesday in a bid to stop the coronavirus.

“The earlier action is taken, the better it is, markets think, for the economy,” said Yuuki Fukumoto, researcher at NLI Research Institute.

In the cash bond market, the 10-year JGB yield rose 1.5 basis points to 0.005% while the 20-year yield rose 2 basis points to 0.295%.

The BOJ offered to buy 350 billion yen ($3.21 billion) of JGBs with five to 10 years to maturity on Monday. Selling interest from market players was stronger than expected, traders said.

The 30-year JGB yield rose 3 basis points to 0.420% ahead of Tuesday’s auction of 30-year JGBs, while the 40-year yield rose 2 basis points to 0.420%.

At the shorter end, the two-year JGB yield rose 0.5 basis point to minus 0.135%. The five-year yield rose 2 basis points to minus 0.100%. ($1 = 109.1100 yen) (Reporting by Hideyuki Sano; Editing by Christopher Cushing)

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