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Dollar, bonds thank Japan
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March 17, 1999: 9:18 a.m. ET
Official Tokyo support prompts robust gains in Treasury, dollar markets
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NEW YORK (CNNfn) - Both Treasury bonds and the dollar climbed to their feet in applause Wednesday, celebrating comments from Japan's minister of finance that reasserted official interest in global money markets.
By 9:00 a.m. ET, the benchmark 30-year Treasury bond was up 14/32 of a point in price at 97-3/32, while the yield crashed back through the 5.50-percent floor to 5.44 percent.
The dollar also surged against the yen, leaping to 118.59 yen from its previous close of 117.63.
Overnight in Tokyo, Kiichi Miyazawa said that the finance ministry will continue to shore up Japan's ailing debt market into the 1999/2000 fiscal year. At present, the government buys about 200 billion yen ($1.69 billion) worth of Japanese government bonds (JGBs) a month in its attempt to encourage demand and confidence in the securities.
The JGB market recently has suffered a multitude of woes, but most have stemmed from simple fears that supply soon may swamp demand as the MOF floods the market with fresh debt to pay for massive economic stimulus packages.
As investors fled JGBs, Japanese yields rose, spurring a reverse movement away from lower-yielding U.S. Treasury bonds.
However, global traders took Miyazawa's comments Wednesday as evidence that the government is still concerned with the problems of money markets, lifting Japanese bond prices and pressuring not only yields but the yen itself.
This, added to Miyazawa's confirmation that April's 10-year JGB offering would remain at a comparatively thin 1.4 trillion yen ($11.8 billion), gave Treasury investors on both sides of the Pacific a sympathetic boost.
News from home and Europe
The domestic Treasury market anticipated a relatively quiet afternoon, with many traders looking to the stock market and the Treasury's monthly auction of two-year notes for guidance. Other than the Federal Reserve's Beige Book survey due at 2:00 p.m. ET, the next major economic milestone is Thursday's release of consumer price statistics.
The euro, for its part, kept to its serene course, drifting marginally lower to $1.0965 from its previous close of $1.0998.
Traders called Europe's recent political scramble a "distraction," but were more concerned about dark hints from the Bank of England that British interest rate cuts could be ahead.
Although the United Kingdom is not yet a member of the eleven-nation euro zone, some investors have speculated that rate cuts could jump the Channel, knocking the euro lower in value. 
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