Japan’s 10-Year Yields Fall to 2010 Low on Europe, Jobs Concern

Japanese government bonds advanced, sending 10-year yields to a 19-month low, amid concerns that Europe’s debt crisis and dwindling U.S. jobs growth will weigh on global growth, supporting demand for refuge assets.

Socialist candidate Francois Holland defeated French President Nicolas Sarkozy and Greek voters flocked to anti- bailout parties, stoking concern European governments will drop deficit-cutting plans. Yields on Japan’s 5-, 20- and 30-year securities fell to levels unseen since October 2010 as domestic markets reopened after two holidays and responded to worse-than- forecast U.S. jobs data from last week.

“The jobs numbers out of U.S. announced during the long holiday in Japan were weak, confirming a slowdown,” said Tadashi Matsukawa, who oversees 130 billion yen ($1.63 billion) as head of fixed-income securities at Tokyo-based PineBridge Investments Japan Co. “Investors who cut some of their positions in Japanese government bonds before the holiday may be buying them back.”

Japan’s 10-year yields dropped three basis points, or 0.03 percentage point, to 0.855 percent at 5:54 p.m. in Tokyo, the sharpest decline since Jan. 26. Yields on 20-year bonds fell three basis points to 1.645 percent, and the 30-year rate declined four basis points to 1.82 percent.

Ten-year bond futures for June delivery closed 0.3 higher at 143.28 on the Tokyo Stock Exchange. The Nikkei 225 Stock Average tumbled 2.8 percent. Japan’s markets were closed on April 30 and May 3-4 for holidays known as Golden Week.

Hollande got about 52 percent of the vote in the French presidential election against about 48 percent for incumbent Sarkozy, according to estimates by four pollsters. In Greece, Socialist Pasok, which partnered with New Democracy in securing a second rescue package for the country, were two seats short of the 151 seats needed to win a majority.

Global shares sold off on May 4 when U.S. data showed employers added 115,000 jobs in April, compared to an 160,000 increase projected by a Bloomberg News survey of economists.

To contact the reporter on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net.

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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