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2026-02-16 17:24:05
[Japanese Government Bond Futures Rally Then Fall Back as Weaker-than-Expected GDP Data Fails to Overcome Selling Pressure at Longer Bonds] ⑴ On Monday, Japanese government bond futures opened higher, boosted by lower US Treasury yields and weaker-than-expected economic growth data. However, the gains were hampered by weakness in ultra-long-term bonds, resulting in light trading throughout the day. ⑵ Futures jumped 10 points from Friday to open at 131.90, then rose to an intraday high of 132.02. Data showed that Japan's annualized GDP growth for the October-December quarter was only 0.2%, far below the 1.6% growth forecast by institutional surveys. ⑶ However, futures failed to break through this level as they had on Thursday and Friday of the previous week. The 10-year yield briefly fell below 2.20% to 2.195% in the morning but quickly rebounded above 2.20%. ⑷ Futures then fell back to 131.90 around 10:00 AM and remained there until the close. Selling pressure first appeared in 20-year bonds and spread to 30-year and 40-year bonds in the afternoon. Trading was light throughout the day as US markets were closed on Monday and many Asian financial centers were on Lunar New Year holiday. A trader at a Japanese securities firm noted some pension funds buying 20-year non-benchmark bonds, while offshore institutions were selling 5-year non-benchmark bonds, but overall trading was not active. Futures briefly rose to 132.06 during the night session. The trader believed that if Tuesday's 5-year government bond auction went smoothly, especially given the Bank of Japan's plan to purchase a large amount of bonds through regular operations on Wednesday, futures could temporarily hold above 132.02.
