June 5, 2019 / 6:56 AM / 3 months ago

JGBs rise after Fed officials strike dovish tone

TOKYO, June 5 (Reuters) - Japanese government bond (JGB) prices advanced on Wednesday on bets the Bank of Japan might loosen its policy stance in the future after comments from U.S. central bank officials hinted at the possibility of an interest rate cut in the face of risks to trade and global growth.

The benchmark 10-year JGB yield shed 2.5 basis points to minus 0.130%, trading at its lowest since August 2016.

The 20-year yield and the 30-year yield fell 2.5 basis points each, to 0.260% and 0.415%, respectively.

Yields on short-dated maturities dropped as well. The five-year yield gave up 4 basis points to minus 0.250% and the two-year yield was off 3.5 basis points at minus 0.225%.

Ten-year JGB futures gained 0.31 points to 153.58, ending at a level not seen since July 29, 2016, with a trading volume of 52,115 lots.

On Tuesday, Federal Reserve Chairman Jerome Powell dropped his standard reference to the U.S. central bank being “patient” in approaching any rate decision, saying instead it will respond as “as appropriate” to trade pressure.

Powell’s comments came a day after St. Louis Federal Reserve President James Bullard said in a speech that a rate cut may be needed “soon.” (Reporting by Tokyo Markets team; Editing by Subhranshu Sahu)

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