TOKYO - Japanese Government bonds jumped yesterday, pushing the 10-year yield to a 19-month low after United States Treasuries rallied late last week when data showing the first fall in US jobs in four years fuelled expectations of a 50 basis-point rate cut by the Federal Reserve.
JGBfutures posted gains for the fifth day as the payrolls report kept investors worried that a credit-market squeeze triggered by problems in the subprime mortgage market could push the US economy into recession.
Revised data showing that Japan's economy contracted in the second quarter from the previous three months also boosted JGBs as it added to the argument that the Bank of Japan may not raise interest rates next week.
"The US jobs data and the GDP figures dealt a double whammy to the market, so we're seeing some panic buying," said Takafumi Yamawaki, a fixed-income strategist at Morgan Stanley in Tokyo.
Japan's economy shrank 0.3 per cent in April-June from the previous quarter, revised data showed on Monday, weaker than forecast and showing the first quarterly contraction this year.
The yield on the benchmark 10-year JGB was 7.5 basis points lower at 1.510 per cent, after slumping to 1.500 per cent, its lowest since February last year.
