JGB futures edge up, recover losses as stocks dip

TOKYO - Japanese government bond futures edged up on Monday, crawling towards a two-month high as Tokyo shares slipped even after the U.S. government unveiled measures to support embattled mortgage lenders.

By (Reuters)

Published: Mon 14 Jul 2008, 1:51 PM

Last updated: Sun 5 Apr 2015, 12:49 PM

The U.S. Treasury and Federal Reserve on Sunday offered emergency cash to troubled mortgage finance giants Fannie Mae and Freddie Mac and the Treasury also said it would buy shares in the companies to shore up investor confidence.

JGBs fell in early trade, tracking a drop in Treasuries in Asia after the U.S. government announced the massive aid package to head off a potential meltdown of global financial markets.

But investors remained uncertain about the market's direction, staying on the sidelines to watch the U.S. government's next moves and reaction from financial markets.

"We can't fully assess the impact of the U.S. measures yet, and it's hard to decide whether to sell or buy at this point," said Katsutoshi Inadome, a fixed-income strategist at Mitsubishi UFJ Securities.

September futures rose 0.08 point to 136.07 after dropping as much as 0.32 point to 135.67. The lead contract hit a two-month high of 136.42 on Friday.

The benchmark 10-year yield was down 1.5 basis points at 1.580 percent, nearing a two-month low of 1.555 percent hit late last week.

The five-year yield fell 2 basis points to 1.120 percent, while the 20-year yield dipped 0.5 basis point to 2.180 percent.

The medium-term segment held firm on caution ahead of quarterly reports from U.S. banks including Merrill Lynch and Citigroup later this week.

The Nikkei share average ended down 0.2 percent at 13,010.16 on Monday after climbing more than 1 percent earlier in the day.

BOJ Policy Board Meets

The Bank of Japan kicked off a two-day policy meeting on Monday, at which it is widely expected to keep interest rates on hold at 0.5 percent.

The central bank will announce its policy decision on Tuesday, followed by a news conference by BOJ Governor Masaaki Shirakawa.

The BOJ is expected to warn that Japan's growth will likely be slower than it had expected a few months ago due to rocketing oil and raw materials prices.