JGBs rally, 20-year yield hits 7-month low; BOJ easing expectations underpin
TOKYO, March 4 (Reuters) - Japanese government bonds rallied on Monday, pushing the benchmark 20-year yield to seven-month low, on expectation of aggressive monetary easing by the Bank of Japan and on concerns U.S. spending cuts could hurt global growth.
* Bank of Japan governor-nominee Haruhiko Kuroda said in his confirmation hearing in parliament on Monday that the current size and type of assets the bank buys are not enough, suggesting a Kuroda-led BOJ will be more aggressive in its approach to ending stubborn deflation.
* The yield on the benchmark 10-year JGBs fell 1.5 basis point to 0.640 percent, its lowest level in nearly 10 years.
* The price of 10-year JGB futures, which reflect the cheapest-to-deliver seven-year sector, rose 0.17 point to 145.22 , just below a record high of 145.26 hit in December.
* Super-long bonds, such as 20- and 30-year bonds, led gains on expectations Kuroda will step up buying in these maturities to enhance easing.
* The 30-year bond yield fell 2.0 basis point to 1.745 percent, after falling 14.5 basis points last week, its biggest weekly decline since December 2008.
* The 20-year yield also fell 2.0 basis points to 1.550 percent, a seven-month low while the five-year yield dipped 0.5 basis point to 0.110 percent, a fresh record low.
* "Speculation is rising that, under Kuroda, the BOJ will buy more in 20- and 30-year bonds. If that happens, maybe the 20-year yield could fall to around 1.2 percent," said a trader at a Japanese bank.
* JGBs are also helped by concerns that automatic spending cuts that took effect in the United States this month could hurt U.S., and global, growth.
* Uncertainty in Italy also underpinned JGBs after inconclusive elections last week raised concerns political paralysis in the euro zone's third biggest economy could rekindle the debt crisis in the currency bloc.