TOKYO, Oct 9 (Reuters) – A gauge of sentiment in the
Japanese government bond market has gone deeper into negative
territory, though investors expect buying at the beginning of
the second half of the fiscal year to keep yields from rising
far from recent ranges, a weekly Thomson Reuters survey showed
on Tuesday.
The weekly poll’s JGB bull-bear diffusion index, calculated
by subtracting the number of bearish market players from those
that are bullish, came in at minus 25, deteriorating from minus
17 in last week’s survey.
The survey found that 41.7 percent of total respondents
expect JGB yields to trade sideways, up from 20.7 percent in the
previous poll. Another 41.7 percent of respondents foresee JGB
yields rising this week, down slightly from 48.3 percent in the
last survey.
The percentage of respondents expecting lower rates fell to
16.7 percent from 31.0 in last week’s poll.
The median forecast for the 10-year JGB yield
for the end of this week was 0.785 percent, one basis point
above Friday’s closing level. Japanese markets were closed for a
national holiday on Monday.
The online survey of 91 JGB market participants from major
institutions received 36 responses, for a response rate of 39.6
percent. These included 14 responses from “real money” investors
from institutions such as banks, pension and investment funds
and insurance companies.
These “real money” investors were slightly less pessimistic
than other respondents, with their sentiment diffusion index
coming in at minus 22 and their 10-year yield expectation at
0.780 percent.
JGB sentiment weakened after a selloff in U.S. Treasuries on
Friday after upbeat U.S. employment data. The U.S. Labor
Department said the unemployment rate fell to a four-year low of
7.8 percent in September, down from 8.1 percent in August, as
114,000 jobs were added.
On the JGB supply-side, superlong maturities could face
pressure ahead of the Ministry of Finance’s 30-year bond sale on
Thursday.
The yield on the benchmark 10-year cash note added half a
basis point on Tuesday to 0.780 percent, while the 10-year JGB
futures contract slipped 0.02 point to 144.08.
