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JGBs fall as risk-averse mood eases after Trump returns to White House

TOKYO, Oct 6 (Reuters) - Japanese government bond prices dropped on Tuesday as investor risk aversion, triggered on news of U.S. President Donald Trump’s COVID-19 infection, eased after he returned to the White House, assuaging fears over political uncertainty.

Benchmark 10-year JGB futures fell 0.16 point to 151.92, with a trading volume of 21,214 lots.

The 10-year JGB yield rose 1.5 basis points to 0.035%, the highest level unseen since Sept. 11.

In the super-long zone, the 20-year JGB yield rose 1 basis point to 0.410%, also marking the highest level since mid-September.

The Ministry of Finance’s sale of 30-year JGBs attracted bids 3.51 times the offer of 900 billion yen ($8.52 billion), in line with bid-to-cover ratio of 3.50 at the previous auction in September.

The auction’s tail, the gap between the lowest and average prices, slightly narrowed to 0.14 from 0.16 last month.

However, the auction had limited impact to the 30-year JGB yield, which rose 1.5 basis points to 0.630%, the highest since July 10.

The 40-year JGB yield rose 1.5 basis points to 0.660%, hitting the highest level since July 10.

At the shorter end of the curve, the two-year JGB yield rose 1 basis point to minus 0.130%, while the five-year yield rose 1.5 basis points to minus 0.100%.

Both yields climbed to the highest levels unseen since mid-September.

Weighing on the bond market was a boost in risk sentiment after President Trump returned to the White House from a three-night hospital stay.

Trump’s doctors told reporters the president has not had a fever in more than 72 hours and his oxygen levels are normal, but they declined to discuss any toll the disease could have on Trump’s lungs or disclose when he last tested negative for the coronavirus.

($1 = 105.6100 yen)

Reporting by Tokyo Markets Team, Editing by Sherry Jacob-Phillips

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