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  1. Japanese government bonds yield curve flattens on Brexit, long yields hit record lows

Japanese government bonds yield curve flattens on Brexit, long yields hit record lows

Long-dated Japanese government bond yields fell to record lows while shorter yields were flat to slightly higher...

By: | Tokyo | Published: June 27, 2016 1:35 PM
The 30-year yield also fell to a record low of 0.110 percent, having fallen more than 100 basis points after negative rates. (Reuters) The 30-year yield also fell to a record low of 0.110 percent, having fallen more than 100 basis points after negative rates. (Reuters)

Long-dated Japanese government bond yields fell to record lows while shorter yields were flat to slightly higher on Monday, as Britain’s decision to leave the European Union led to expectations of more global economic stagnation.

The 20-year JGB yield fell 3.0 basis points to 0.080 percent , having fallen 83.5 basis points since the BOJ adopted negative rates in late January.

Also Read: Bank of Japan can stand pat if Brexit turmoil proves temporary: Ex-executive Momma

The 30-year yield also fell to a record low of 0.110 percent, having fallen more than 100 basis points after negative rates.

On the other hand, short- to medium term paper were steady to weaker, with the 10-year yield flat at minus 0.200 percent .

“This doesn’t look like short-term risk-off trading. It’s more about that growth will be sluggish longer-term,” said Akito Fukunaga, chief fixed income strategist at Barclays.

Such expectations of low global growth and evaporation of yields due to negative interest rates in Europe and Japan are pushing down bond yields globally.

To the extent that globalisation has boosted the world’s growth over decades, separatist moves such as Brexit could hamper growth in the long run, investors say.

The 10-year U.S. Treasuries yield fell to as low as 1.480 percent on Monday, with markets pricing out any chance of a rate hike by the Federal Reserve in coming months.

In Japan, many market players expect the BOJ to ease at its next policy meeting in late July to ease the pain from the yen’s rise in recent months, which accelerated after Brexit.

The yen hit a 2 1/2-year high of 99 to the dollar on Friday and last stood at 101.93, having risen 15 percent so far this year.

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