JGBs fall after US jobs data eases economy worries

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Monday September 06, 2010 08:11:01 PM GMT

TOKYO, Sept 6 (Reuters) - Japanese government bonds fell on Monday, with the futures dropping to an eight-week low, after better-than-expected U.S. jobs data further eased concerns over the health of the global economy and hurt demand for safe haven debt.

* Data released on Friday showed that U.S. employment declined less than forecast in August, adding to several indicators last week suggesting that pessimism towards the U.S. economy, and as an extension the global economy, was perhaps overdone.

* The JGB market's continued drop is part of a wider phenomenon among government bonds, with U.S. Treasuries and German Bunds also retracing strong rallies on the slight thaw in economic pessimism.

* The benchmark 10-year yield was up 2 basis points at 1.155 percent after hitting a two-month high of 1.160 percent. The yield has surged more than 25 basis points from a seven-year trough of 0.895 percent hit less than two weeks ago, when the yield curve was in a bull flattening trend on heavy buying by financial institutions looking for higher yields in longer-dated maturities.

* The 30-year yield rose 1.5 basis points to 1.935 percent. The superlong maturities are expected to remain on the back foot due to caution ahead of a 30-year sale later in the week.

* The auction will test investor demand after the superlongs were exposed to heavy selling last week, as institutional investors booked profits ahead of the Sept. 30 domestic fiscal half-year end.

* September 10-year futures were down 0.30 point at 141.60 after hitting an eight-week low of 141.41. The futures dipped into the cloud on the Ichimoku chart -- a bearish technical signal -- for the first time since rising above the cloud late in April. (Reporting by Shinichi Saoshiro; Editing by Edmund Klamann)

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