Bloomberg News

Japan’s Bond Futures Rise to 6-Month High on Greece Concern

June 17, 2011

June 17 (Bloomberg) -- Japan’s bond futures rose to a six- month high as concern Greece will struggle to avoid default boosted demand for the safety of the Asian nation’s debt.

Bonds gained for a second day after Jean-Claude Juncker, head of the euro-region finance ministers group, said a “hard haircut” for investors in Greek securities would risk contagion to other European countries. Bonds also advanced as Asian stocks fell and before a report that economists said will show U.S. consumer confidence fell this month, adding to signs the world’s largest economy is losing momentum.

“People in Greece may not approve austerity measures required by the international community, and we don’t see how the situation will be resolved,” said Satoshi Yamada, who helps oversee about $12.7 billion as manager of fixed-income trading at Okasan Asset Management Co. in Tokyo. “When risk factors rise, bonds in Germany, the U.S. and Japan get bought.”

Ten-year bond futures for September delivery gained 0.10 to 141.17 as of the afternoon close at the Tokyo Stock Exchange. The contracts earlier touched 141.33, the highest since Dec. 7. They were up from 140.90 on June 10.

The yield on the 1.2 percent bond due June 2021 was unchanged at 1.12 percent as of 3:18 p.m. at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The price was 100.719 yen. Five-year yields dropped one and a half basis points to 0.415 percent. A basis point is 0.01 percentage point.

The MSCI Asia Pacific Index of shares slid 0.5 percent, and the Nikkei 225 Stock Average fell 0.6 percent.

The Thomson Reuters/University of Michigan final index of consumer sentiment dropped to 74 this month from 74.3 in May, according to the median estimate of economists in a Bloomberg News survey before today’s data.

--Editor: Jonathan Annells

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net.

To contact the editor responsible for this story: Nicholas Reynolds at nreynolds2@bloomberg.net


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