JGBs fall ahead of debt auction
Published September 3rd, 2007
Japanese government bond futures fell on Monday, edging towards a three-week low as caution weighed in ahead of a 10-year note auction this week.
JGB futures rose initially on unexpectedly weak data on Japanese companies’ capital spending for the second quarter, which supported the view that the Bank of Japan is unlikely to raise interest rates this month.
But the gains faltered in subdued trade as most investors stayed on the sidelines to see if U.S. economic data this week reinforces views that the Federal Reserve will cut interest rates at its policy meeting on Sept. 18.
Market players are also looking closely to an interest rate decision by the European Central Bank on Thursday, after ECB President Jean-Claude Trichet has sought to keep the bank’s options open after the market turbulence of the past month.
Analysts said the chances of an interest rate hike by the BOJ as early as this month would diminish further if the ECB keeps interest rates on hold this week.
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