JGBs gain on imminent COVID-19 state of emergency in Tokyo

TOKYO, Jan 5 (Reuters) – Japanese government bonds (JGBs) gained on Tuesday as an imminent tightening of social restrictions to curb the spread of COVID-19 underpinned the allure of low-risk government bonds.

Benchmark 10-year JGB futures rose 0.15 point to 152.03, the biggest gain in almost two months.

Still, buying slowed in late trade ahead of Wednesday’s auction of 10-year JGBs, the first bond sale by the Ministry of Finance this year.

Japan’s Chief Cabinet Secretary Katsunobu Kato told a news conference the government is working toward a decision on a state of emergency in Tokyo and the surrounding areas on Thursday.

The 10-year JGB yield fell 1 basis point to 0.010% while the 20-year yield dropped as much to 0.390%.

The yield on 30-year JGBs fell 1 basis point to 0.640%.

The shorter end of the market was also firm, with the two-year yield falling 0.5 basis point to minus 0.130% and the five-year yield dipping 1 basis point to minus 0.120%.

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