Japanese government bonds end morning lower as stocks rise on weaker yen

Tue, Feb 19 2008, 03:05 GMT
http://www.afxnews.com

TOKYO (Thomson Financial) - Japanese government bond prices fell Tuesday morning as interest shifted in favor of stocks on the back of a softer yen and a better European stock performance overnight.

The Nikkei 225 Stock Average edged up 75.45 points or 0.6 percent to 13,710.85.

Investors were generally quick to react to selling pressure, with bond prices having already factored in the chance of a slowdown in economic growth.

"Trading in the bond market will likely stay range-bound between the yields of 1.4 percent and 1.5 percent on the benchmark 10-year government bond in the continued absence of major leads," said Akihiko Inoue, strategist at Mizuho Investors Securities.

"Investors have switched their focus to determining when the economy might bottom out and how quickly it could recover. The upside for yields (the downside for prices) will be limited unless the economy shows signs of a deeper-than-expected slowdown or shows it will stay under pressure for a prolonged time," he said.

Financial markets in the US were closed overnight for the President's Day holiday.

At midday, the yield on the benchmark 10-year bond was up at 1.465 percent from 1.450 percent late Monday.

The yield on the two-year note was up at 0.590 percent from 0.580 percent, and the yield on the five-year bond was up at 0.945 percent from 0.930 percent.

The yield on the 20-year bond was up at 2.090 percent from 2.085 percent, and the yield on the 30-year bond inched up to 2.340 percent from 2.330 percent.

Bond prices move inversely to yields.

The price of the March futures contract for the 10-year bond was down at 137.37 yen from 137.45 yen late Monday.

(1 US dollar = 108.16 yen)