Reply #29: JGBs surge as Treasuries rise on weak U.S.job data

[Ghost Dog]

http://yahoo.reuters.com/news/articlehybrid.aspx?type=comktNews&storyID=urn:newsml:reuters.com:20060605:MTFH53213_2006-06-05_07-19-11_T235236&pageNumber=0&imageid=&cap=&sz=13&WTModLoc=HybArt-C1-ArticlePage2

TOKYO, June 5 (Reuters) - Japanese government bond prices jumped on Monday, tracking a rise in U.S. Treasuries in the previous session after weak employment data boosted expectations the Federal Reserve will not raise interest rates this month.

JGBs have followed the U.S. market for the past several sessions as investors seek clues about the direction of U.S. monetary policy, which could also affect the course of Japanese interest rates.

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The lead June 10-year JGB futures contract <2JGBv1>, which opened trading up 0.40 point from Friday's close of 133.03, ended the afternoon session up 0.48 point at 133.51. The benchmark 10-year yield <JP10YTN=JBTC> was down 4.5 basis points at the intraday low of 1.860 percent as of 0644 GMT.

The two-year JGB yield <JP2YTN=JBTC> fell 4.5 basis points to 0.815 percent, sliding further away from 0.9 percent hit on Thursday, the maturity's highest level since 1998 according to available records.

EYES ON BOJ

Some analysts said if the Fed were to take a pause from its two-year tightening cycle this month and if the BOJ was seen to be in a rush to raise interest rates, it could put pressure on the yen to rise, a development the BOJ might not welcome. But unless the yen surges, the BOJ will probably lift interest rates as early as July even if the Fed holds off on raising interest rates this month, traders and analysts said.

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