The Japanese government bonds gained on Tuesday, following global debt prices as investors remain uncertain after UK’s decision to leave the European Union threatened to slow growth and keep the Federal Reserve from raising interest rates.
Also, rising possibilities for further monetary and quantitative easing from the Bank of Japan boosted demand for fixed income securities.
The yield on the benchmark 10-year bonds, which moves inversely to its price fell 1-1/2 basis points to -0.205 percent, yield on 15-year bonds dipped 2-1/2 basis points to -0.073 percent, super-long 40-year bonds tumbled more than 3 basis points to 0.090 percent and the yield on 30-year JGB slid 3 basis points to 0.076 percent and 20-year bond yield ticked down 3-1/2 basis points to 0.055 percent by 05:55 GMT.
Following the global debt markets, Australia’s 10-year yield slid to 1.95 percent, UK’s 10-year yield fell to 0.93 percent, New Zealand’s 10-year yield declined to 2.3 percent and South Korea’s 10-year touched 1.45 percent.
Moreover, Japan Prime Minister Abe said he will keep be telling the G7 that Japan will do its utmost to settle markets, although markets have calmed to some extent, but outlook remains unclear. Said need to monitor effects of Brexit on real economy and he wants Aso, Kuroda to cooperate and watch markets closely. Also, Japan ruling party official calls for ¥20 trillion stimuli.
Similarly, Bank of Japan Governor Kuroda said that central banks are ready to take steps to assist proper financial markets functioning.
In addition, Japan Finance Minister Aso said that financial market has regained calm this week and he is closely monitoring FX market, will respond when necessary. He also said FX market turned out to be more stable than worst case we had imagined before Brexit.
Apart from this, the S&P an American financial services company announced that it has cut the UK’s sovereign credit rating to AA, from previous AAA. According to S&P, the outcome of the UK’s EU referendum will lead to less predictable, stable, and effective policy framework in the UK.
The S&P also added that they have reassessed their view of the UK's institutional assessment and now no longer consider it strength in their assessment of the rating.
Moreover, US Fed Funds futures discount a 9 percent chance of a 25 basis points rate hike by end-year and a 24 percent chance of a rate cut by the September FOMC meeting, according to Bloomberg calculations.
The benchmark Nikkei 225 index closed up 0.09 percent at 15,323.14, and the broader Topix index closed lower 0.09 percent to 1,224.62 points.
The material has been provided by InstaForex Company – www.instaforex.com