Reuters, TOKYO- Japanese government bonds jumped on Monday and the five-year yield hit a 2-1/2-year low on spreading turmoil in global credit markets that has sent investors and hedge funds scrambling to unwind losing positions.

JGBs were underpinned by U.S. jobs data last week showing companies cutting workers for a second straight month, which boosted Treasuries and knocked stocks lower. The Nikkei share average lost 2 percent on Monday.

But analysts said the troubles in credit markets had caused repercussions in the JGB market by throwing historical relationships between futures, cash bonds and other securities out of whack, forcing players to bail out of bad bets.

The fallout has driven yen swap spreads out sharply to all-time highs and also pushed Japan’s benchmark credit derivatives index, the iTraxx CJ, to record peaks.

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Forbes – TOKYO- Japanese government bonds jumped on Monday and the five-year yield hit a 2-1/2-year low on spreading turmoil in global credit markets that has sent investors and hedge funds scrambling to unwind losing positions.

JGBs were underpinned by U.S. jobs data last week showing companies cutting workers for a second straight month, which boosted Treasuries and knocked stocks lower. The Nikkei share average lost 2 percent on Monday.

But analysts said the troubles in credit markets had caused repercussions in the JGB market by throwing historical relationships between futures, cash bonds and other securities out of whack, forcing players to bail out of bad bets.

The fallout has driven yen swap spreads out sharply to all-time highs and also pushed Japan’s benchmark credit derivatives index, the iTraxx CJ, to record peaks.

Read Complete Article