December 19, 2018 / 2:56 AM / 6 months ago

JGBs rise, futures in biggest jump since BOJ's yield curve control

TOKYO, Dec 19 (Reuters) - Japanese government bond prices rose on Wednesday, with the benchmark futures contract posting the biggest intraday gains since the central bank started its yield curve control policy in 2016, on growing concerns over the health of the global economy.

Buying in futures accelerated after the Bank of Japan kept the amount of its buying in five- to 10-year bonds steady, despite speculation that it could reduce buying following recent falls in JGB yields.

Thin trading conditions near the year-end made trading more volatile.

The benchmark 10-year JGB futures rose as much as 0.42 point at one point, the biggest gain since the central bank started the current policy framework to control the 10-year JGB yield in September 2016.

The futures contract stood at 152.68 at midday, up 0.36 point. The price hit its highest since July 2016.

JGB futures prices typically move less than 0.10 point a day on average due to the BOJ’s policy.

Japanese bonds also took their cue from a rally in U.S. Treasuries.

The 10-year U.S. Treasuries yield dropped to a near-seven month low of 2.799 percent as a plunge in oil prices increased worries about a global slowdown and fanned speculation the U.S. Federal Reserve might be done with tightening after its policy meeting later in the day.

The yield on the 10-year JGBs dropped 1.5 basis points to 0.010 percent, its lowest since September last year.

The five-year yield dropped to as low as minus 0.165 percent, its lowest since April 2017. (Reporting by Tokyo Markets Team Editing by Jacqueline Wong)

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