Bonds News

JGBs ease as COVID-19 vaccine, U.S. political developments weigh

TOKYO, Nov 10 (Reuters) - Japanese government bonds slipped on Tuesday as their safe-haven appeal was dented following the news on major progress in the development of a coronavirus vaccine and on reduced political turbulence after the U.S. presidential elections.

Still, an auction of 30-year JGBs drew strong demand, helping to limit the losses while investors also looked to how far U.S. bond yields will rise beyond their eight-month high hit on Monday.

Benchmark 10-year JGB futures fell 0.29 point to 151.89, on course to make their biggest fall in more than two months.

The yield on 10-year cash JGBs rose 1.5 basis points to 0.030% while the 20-year yield rose 2 basis points to 0.405%.

The rise in yields came after Pfizer and German partner BioNTech SE said its experimental COVID-19 vaccine was more than 90% effective based on initial trial results.

The 30-year JGB yield rose 2 basis points to 0.645%, hovering close to a nearly two-year high of 0.650% touched last week.

But the auction of 900 billion yen ($8.58 billion) 30-year JGBs attracted solid bids, with the auction’s tail shrinking to 0.06 from 0.14 in the previous auction last month, supporting the market.

At the shorter end, the two-year JGB yield rose 0.5 basis point to minus 0.145% while the five-year yield rose 1.5 basis points to minus 0.105%.

With the Bank of Japan seen keeping its 10-year bond yield target at 0% in the near future, investors looked to overseas bonds for a short-term clue.

The 10-year U.S. Treasuries rose as high as 0.975% in the previous session, but eased to 0.915% early Tuesday.

$1 = 104.94 yen Reporting by Tokyo Markets Team, Editing by Sherry Jacob-Phillips