Japan’s Benchmark 10-Year Yields May Decline to 0.9%: Technical Analysis

Japan’s 10-year government bond yields may decline to a nine-month low of 0.9 percent after breaking below the key level of 1 percent, Mizuho Securities Co. said, citing trading patterns.

Indicators that track the market’s trend, such as the moving average conversion-divergence, or MACD, signal yields may slide to the target over the next month, said Tetsuya Miura, chief market analyst at Japan’s second-largest bank by market value. The MACD was -0.0261 yesterday, below the so-called signal line of -0.0217, based on Bloomberg data. A reading under the signal line suggests the yield will decrease.

“The indicators have yet to signal the market is overheated,” Miura said. “Yields may decline further.”

Benchmark yields dropped to as low as 0.975 percent yesterday, the least since Nov. 12. They were little changed at 1.03 percent as of 10:47 a.m. in Tokyo.

The fair value of Japan’s 10-year yields is 1.07 percent, if U.S. yields are at about 2.5 percent and the three-month Tokyo interbank offered rate, or Tibor, is near 0.3 percent, Miura said. The 10-year Treasury yield was at 2.29 percent today and Tibor held at 0.339 percent yesterday.

MACD is a gauge of momentum is calculated by subtracting the 26-day exponential moving average from the 12-day average.

In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index.

To contact the reporter on this story: Yumi Ikeda in Tokyo at yikeda4@bloomberg.net.

To contact the editor responsible for this story: Rocky Swift at Rswift5@bloomberg.net.

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