Japanese bonds rose, sending benchmark yields to a seven-year low, after Federal Reserve Chairman Ben S. Bernanke said the outlook for the world’s largest economy is “unusually uncertain.” Ten-year bonds rallied for a second day as Bernanke’s comments added to speculation the global recovery is slowing, spurring demand for the safety of debt. Bond futures climbed to the highest since 2003 before U.S. reports that economists said will show initial claims for jobless benefits rose and existing- home sales fell. The Ministry of Finance sold 20-year debt today with a lowest price above that forecast in a Bloomberg survey. “It will take some time before the anxiety about the fate of the global economy can be removed,” said Masaru Hamasaki, chief strategist in Tokyo at Toyota Asset Management Co., which oversees the equivalent of $15 billion. “Bonds will continue to draw buying, helping 10-year yields stay below the fair value level of 1.2 percent.” The yield on the benchmark 10-year bond fell 3.5 basis points to 1.05 percent as of 1:25 p.m. in Tokyo at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The 1.1 percent security due June 2020 rose 0.314 yen to 100.448 yen. Yields dropped to 1.045 percent, the lowest since August 2003. Ten-year bond futures for September delivery added 0.26 to 141.96 at the Tokyo Stock Exchange, after earlier rising as high as 142.08. Ready to Act Bonds advanced around the world after Bernanke told the Senate Banking Committee in Washington yesterday that central bankers were ready to act to support growth. The Fed Chairman will testify to the House Financial Services Committee today. The Nikkei 225 Stock Average slid for a fifth day, losing 0.6 percent, after U.S. shares dropped yesterday. U.S. initial jobless claims rose to 445,000 last week from 429,000 the prior period, according to a Bloomberg survey before the Labor Department report today. The National Association of Realtors will say sales of previously owned homes fell in June by the most this year, a separate survey showed. “The debt market has more room to price in downside risks to the economy,” said Yasunari Ueno, chief market economist at Mizuho Securities Co. in Tokyo. “Japan’s 10-year yield may head for the 1 percent mark.” The Finance Ministry sold 1.1 trillion yen ($12.7 billion) of 20-year debt with a lowest price of 99.75, higher than the 99.65 estimated by traders and analysts surveyed by Bloomberg. The sale drew bids for 4.46 times the amount on offer, compared with a so-called bid-to-cover ratio of the average of 3.35 for the past 10 auctions. To contact the reporters on this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net; Yasuhiko Seki in Tokyo at yseki5@bloomberg.net.

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