March 14 (Bloomberg) -- Japan’s bonds may rise for a second day on
speculation damage from the nation’s most powerful earthquake on
record will impair the economic shop online 2011 recovery and spur demand for the refuge
of government debt.
Yields on benchmark 10-year bonds are likely to decline toward the
lowest level in a month as Bank of Japan policy makers meet today after
Governor Masaaki Shirakawa said he’s ready to provide "massive"
liquidity to the financial markets. The nation’s currency reached a
four-month high today amid prospects Japanese investors are
repatriating assets, raising concern a stronger yen will hurt exporters
’ earnings.
“The market is more likely to focus on the downside risk to the
economy," Akito Fukunaga, chief rates strategist at the brokerage unit
of Royal Bank of Scotland Plc., wrote in a Japanese-language note
today. ‘‘We see a chance for bond yields to fall for the near term.’
’
Ten-year bond futures for June delivery last traded at 139.65 in London
on March 11, compared with 139.20 at the 3 p.m. close of the Tokyo
Stock Exchange. The contract will open for trading at 9 a.m. Tokyo
time.
Bonds will trade as usual starting at 8:40 a.m., according to Japan
Bond Trading Co., the nation’s largest interdealer debt broker. It
halted transactions at 2:49 p.m. in Tokyo on March 11 as the quake
shook buildings in the capital.
The yield on the 1.3 percent security due March 2021 fell 2.5 basis
points to 1.27 percent on March sunglasses 2011 11. The yield reached 1.22 percent on
Feb. 24, the lowest since Feb. 2.
‘Massive’ Liquidity
The magnitude-8.9 earthquake on March 11 triggered a tsunami that swept
as far as 20 kilometers (12.4 miles) inland along the northern coast,
risking meltdowns at two nuclear power reactors. Chief Cabinet
Secretary Yukio Edano said the government would use 200 billion yen
($2.4 billion) of money left over from the budget for the fiscal year
ending March 31 to start an extra spending package.
Shirakawa told reporters late yesterday he is ready to inject more
short-term cash into the banking system starting this morning in Tokyo,
as the BOJ seeks to ensure financial stability. Today’s decision on
policy was originally scheduled for tomorrow. The central bank said it
cut short the gathering to accelerate its response.
Kobe Quake
Liquidity from the central bank may fail to prevent yields from rising
as pressure mounts on insurance companies and Prime Minister Naoto Kan
’s administration to sell bonds to pay for reconstruction.
‘‘Rebuilding after the Kobe quake was a significant strain on the
budget, and the cleanup and rebuilding cost is likely to be even higher
this time,” Chris Low, chief economist at FTN Financial in New York,
wrote in a research note on March 11. Yields on 10-year debt “are
likely to increase as much as 50 basis points or more over the next
year,” he wrote.
In the five trading days after a 6.9-magnitude earthquake struck Kobe,
western Japan, in January 1995 chanel sunglasses 2011 killing more than 6,000 people, yields
rose 8 basis points, or 0.08 percentage point, to 4.73 percent.
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