Japan's shorter-end bond yields edge down as US government shuts down

Yields on Japan's shorter-dated government bonds edged down on Wednesday as investors bought safe-haven assets as uncertainties rose after the U.S. government entered a shutdown.

The two-year JGB yield fell 0.5 basis point to 0.95%. The 10-year JGB yield fell 0.5 bp to 1.64%.

The U.S. government shut down much of its operations on Wednesday as deep partisan divisions prevented Congress and the White House from reaching a funding deal.


"Investors struggled to find market-moving cues today so the news about the U.S. government shutdown was a possible catalyst," said Naoya Hasegawa, chief bond strategist at Okasan Securities.

The reaction to a Bank of Japan survey known as 'tankan' was limited as the outcome was within market expectations, Hasegawa said.

Confidence among big Japanese manufacturers improved for the second straight quarter and firms maintained their upbeat spending plans, heightening the chance of an interest rate hike as soon as this month.

The five-year yield was flat at 1.225%, after falling to 1.22% earlier in the session.

The longer-ended bond yields edged up, with the 20-year JGB yield inching up 0.5 bp to 2.61%. The 30-year JGB yield was also up 0.5 bp to 3.145%.