2023-08-07 22:35:00
The bond market is expected to fall on the 8th. US long-term interest rates continue to rise due to concerns regarding supply and demand ahead of regular auctions. Uncertainty regarding interest rates accompanying the Bank of Japan’s flexible yield curve control (long-term interest rate control, YCC) is also weighing on the market. There is a view that the 30-year government bond auction will be passed without incident, and the market is likely to move steadily following the auction.
Hitoshi Okumura, senior interest rate strategist at SMBC Nikko Securities, said the 30-year interest rate of 1.6% is not necessarily a high enough level, so he expects the market to adjust in the morning due to concerns regarding the auction. However, he said, “There is also the expectation of the BOJ’s support when interest rates rise, so it will pass without incident.”
The expected range for the yield of the new 10-year 371st issue is 0.62% to 0.64% (0.62% on the 7th), and the September futures mainly contract month is 146.30 yen to 146.60 yen (146.60 yen on the 7th). )
The US 10-year bond yield on the 7th ended at around 4.09%, 5 basis points (bp, 1bp = 0.01%) higher than the previous weekend. Markets were weighed down by a large amount of corporate bond issuance and scheduled quarterly auctions of $103 billion in 3-, 10-, and 30-year bonds.
In futures night trading, the September contract closed at 146.41 yen, 19 yen lower than the closing price of the daytime trading on the 7th.
Okumura commented on June’s June monthly labor statistics, saying, “If wage data shows a further upswing, there is a possibility that selling pressure will occur in the 10-year zone due to the image that the upper limit of interest rates allowed by the Bank of Japan will rise. There is. However, with the BOJ stepping up its purchases at milestone interest rates, it is difficult to imagine a sharp rise in interest rates.
30-year bond auction
Keiko Onoki, Senior JGB Strategist, Daiwa Securities Co., Ltd. Aiming for a successful bid in the 1.6% range Strong demand for short cover (repurchase of short-term contracts) is likely to result in a safe bidding, but the secondary market is sluggish Possible Note: Past Auction Results for 30-Year Government Bonds
Bank of Japan operation
Implement limit-price operations to purchase unlimited 10-year JGBs at a yield of 1% every business day.
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