JGBs again on losses as oil pulls back (Reuters) (25-02-2011)

TOKYO - Japanese government bonds retreated on Friday, as investors squared positions in the debt market with oil prices going a little down.

Bond futures opened higher but erased those gains on fears tensions in the Middle East will continue to drive safe-haven demand for debt.

March 10-year futures fell 0.20 point to 139.59 reversing course after a three-week high in the morning and snapping a three-day rally.

The benchmark 10-year yield rose 2.0 basis points to 1.245 percent. The yield climbed to a 10-month peak of 1.350 percent earlier this month before the unrest in the Middle East escalated.

The 5-year yield rose 2.5 basis points to 0.550 percent and the 20-year yield was up 0.5 basis point at 1.995 percent, after hitting 1.985 percent, its lowest in three weeks.

The 20-year bonds stayed firm, supported by index-following players' month-end purchases. The yield curve bear-flattened as the rise in mid-term yields outpaced long-term and superlong bonds, tightening the fiveyear/20-year spread to roughly 144 basis points from 148 basis points on Wednesday.

The 5-year/10-year spread tightened to around 69 basis points, the lowest since late December.

U.S. Treasury debt prices rose on Thursday on safe-haven buying on the uprising in Libya and worries that oil price rises could crimp consumer spending, harming the U.S. economic recovery.

Source: Reuters