JGB yields inch up after U.S. Senate passes budget blueprint

TOKYO, Oct 20 (Reuters) – Japanese government bond yields inched up on Friday after the U.S. Senate approved a budget blueprint for the 2018 fiscal year that will pave the way for Republicans to pursue a tax-cut package without Democratic support.

The yield on the 10-year JGBs rose 1.0 basis point to 0.070 percent, while the 10-year JGB futures price dropped 0.07 point to 150.31.

The 20-year yield rose 1.0 basis point to 0.605 percent.

The five-year bond yield rose 1.0 basis point to minus 0.080 percent, partly because the Bank of Japan’s buying in that maturity was a bit on the weaker side.

Most investors expect Japanese Prime Minister Shinzo Abe’s ruling coalition to win the general election on Sunday, allowing Abe to appoint an advocate of massive monetary easing to head the Bank of Japan after current chief Haruhiko Kuroda’s term expires next April.

But should there be an upset in the election, JGBs could come under pressure as investors consider the possibility that the BOJ’s easing would be scaled back after Kuroda leaves. (Reporting by Tokyo Markets Team; Editing by Biju Dwarakanath)

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