Japanese Buying Fuels Bond Gains
The sorry state of affairs in Japan drew some attention away from the slowdown stateside Thursday, helping to inject a "safety" bid into the long-end as the rest of the curve absorbed agency supply. Tacit approval of a weaker yen Wednesday and Fin Min Miyazawa comments overnight that Japan's fiscal house was near a "state of collapse" fueled Japan investor demand for T-notes and bonds, unusual during New York morning hours, which lagged a chunky dollar bid to 20-month highs in Tokyo to Y120.40. Freddie Mac sold $10 billion in 2s and 5s, generating interest from Asian accounts, while a hedge fund bid 2s/5s with borrowed yen.
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