Japan 10-Yr Yield to Stay Below 0.86%: Technical Analysis

Japan’s 10-year yields may stay below 0.86 percent after forming a so-called dome pattern, said Sumitomo Mitsui Financial Group Inc. (8316), citing trading patterns.

Benchmark yields have fallen four basis points since peaking at a two-month high of 0.86 percent on Aug. 16 and 17, completing the dome formation, said Daisuke Uno, chief strategist in Tokyo at a unit of Sumitomo Mitsui, Japan’s second-largest bank by market value. Ten-year rates had climbed from a nine-year low of 0.72 percent marked on July 23.

“Yields reached 0.86 percent, forming the round top,” Uno said. “The rising trend in rates has stopped.”

Ten-year bond yields this week have closed the gap between the intraday levels on Aug. 15 and 16, a downward move that signals rates may stay below 0.86 percent in the near term, according to Uno. Yields were as high as 0.82 percent on Aug. 15 and as low as 0.835 percent on Aug. 16.

Japan’s 10-year yield fell half a basis point to 0.82 percent yesterday, according to Japan Bond Trading Co., the nation’s largest interdealer debt broker.

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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