JGBs fall in line with U.S. Treasuries; 10-year yield at 15-month high

March 18 (Reuters) – Japanese government bond (JGBs) prices dropped on Wednesday, after U.S. Treasuries fell partly on a modicum of hopes for policy support but also due to fire-sales by desperate investors trying to close positions in unstable market conditions.

The benchmark 10-year JGB futures fell 0.81 point to 151.75, with a trading volume of 22,001 lots.

The key 10-year cash JGB yield gained 4.5 basis points to 0.050%, its highest since December 2018.

In the superlong zone, the 20-year bond yield added 2.5 bps to 0.300%, the 30-year yield climbed 3.5 bps to 0.390% and the 40-year yield gained 2.5 bps to 0.375%.

At the shorter end of the market, the five-year debt yield rose 3 bps to minus 0.075%, while the two-year yield gained 1.5 bps to minus 0.180%.

Most traditional safe-haven assets were under pressure as battered investors looked to unwind their damaged positions.

Overnight, U.S. Treasuries extended losses, driving the benchmark 10-year yield to 1.009%, after the Fed said it would relaunch financial crisis-era purchases of short-term corporate debt to thaw credit markets strained by the coronavirus.

“The staggering thing is, bonds have fallen even as the Fed has been buying 40 billion dollars of bonds every day. That far outpaces the Fed’s previous episodes of quantitative easing and shows just how much selling pressure there is now,” said Tomoaki Shishido, senior fixed income strategist at Nomura Securities.

Some market players said talk of big stimulus is raising concerns about the long-term outlook of U.S. fiscal health, putting pressure on long-term U.S. government bonds. (Reporting by Tokyo Markets Team; Editing by Subhranshu Sahu)

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