September 6, 2017 / 6:29 AM / 16 days ago

JGBs mostly firm, taking cue from U.S. Treasuries

TOKYO, Sept 6 (Reuters) - Benchmark Japanese government bonds were mostly firm on Wednesday, taking their cues from firm U.S. Treasuries as concerns about tensions on the Korean peninsula continued to underpin fixed income markets.

The 10-year cash JGB yield inched down half a basis point to 0.005 percent.

The September 10-year JGB futures contract finished up 0.04 point at 151.26, while the December contract added 0.05 point to 151.07.

A top North Korean diplomat on Tuesday warned that his country was ready to send “more gift packages” to the United States as world powers struggled for a response to Pyongyang’s latest nuclear weapons test.

In the superlong zone, the 20-year JGB yield was flat at 0.520 percent, after having earlier touched 0.515 percent, its lowest since December 2016.

The yield on benchmark 10-year Treasury notes stood at 2.070 percent, steady from its U.S. close on Tuesday, and not far from 2.054 percent touched earlier, which was its lowest level since Nov. 10.

Markets had a muted response to Japanese economic data released earlier on Wednesday that raised doubts about the Bank of Japan’s assertions that a tightening labour market will lead to higher wages and an increase in consumption, which in turn will boost economic activity and inflation.

Japanese workers’ wages fell in July from a year earlier on a drop in summer bonus payments, casting some doubt on the sustainability of a recent improvement in consumer spending. Labour ministry data showed wages fell in both nominal and inflation-adjusted real terms.

Reporting by Tokyo markets team; Editing by Sunil Nair

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