Tokyo : Japan's ten-year bond futures advanced for a fourth week as stocks tumbled worldwide on concern Europe is unable to contain its debt crisis, boosting demand for the relative safety of government debt.
Ten-year yields reached the lowest level in more than four months after European Central Bank President Jean-Claude Trichet on May 6 resisted pressure from investors to take new steps to halt the crisis stemming from Greece. The Bank of Japan said Friday it would pump 2 trillion yen (Dh80 billion) into the financial system to stabilise the market.
"As risk aversion stemming from the Greek crisis dominates markets, Japan's bonds are being bought," said Shinji Hiramatsu, senior investment manager in Tokyo at Sompo Japan Asset Management Ltd, which oversees about $15.2 billion. "The debt issue seems to have no solution in sight."
Ten-year bond futures for June delivery advanced 0.23 to 139.91 at the Tokyo Stock Exchange last week.
The yield on the 1.4 per cent bond due March 2020 declined half a basis point last week to 1.275 per cent in Tokyo at Japan Bond Trading Co, the nation's largest interdealer debt broker. The price rose 0.044 yen to 101.094 yen. The yield Friday reached 1.25 per cent, matching the lowest level since December 22. A basis point is 0.01 percentage point.
"A rosy outlook about the global economy and financial situation, supported by strong US stocks, is clearly being corrected," Yasunari Ueno, chief market economist at Mizuho Securities Co in Tokyo, a unit of Japan's second-largest banking group, wrote in a note to clients Friday.
