Japan’s 10-year bond yields fall to near 4-week lows

JAPAN’S 10-year government bond (JGB) yields fell on Friday (Oct 28) to their lowest in nearly four weeks, after the Bank of Japan (BOJ) kept its dovish stance unchanged in a widely expected conclusion to its policy-setting meeting.

The 10-year JGB yield fell as much as 1.5 basis points to 0.235 per cent, its lowest since Oct 4, after hovering at the top end of the central bank’s policy band for a week. It was last at 0.240 per cent

The BOJ kept ultra-low interest rates and maintained its dovish guidance, cementing its status as an outlier among global central banks tightening monetary policy, as recession fears dampen prospects for a solid recovery.

“The outcome (of the BOJ’s policy meeting) was in line with expectations. Investors were buying bonds to cover their short positions ahead of the meeting, so that was sign that the market also had expected this,” said Takafumi Yamawaki, head of Japan rates research at JP Morgan Securities.

“Yields may have not peaked yet, but global trend of rising yields seems to be pausing now, which has made it easier for the Bank of Japan to keep its yield curve control policy.”

Yields on beaten-down long-dated bonds also fell. The 20-year JGB yield was down 3 basis points at 1.080 per cent, after falling as low as 1.060 per cent - its lowest since Oct 14.

BT in your inbox

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign Up

Sign Up

The 30-year JGB yield fell 4 basis points to 1.435 per cent, its lowest since Oct 11.

The 40-year JGB yield fell 3.5 basis points to 1.660 per cent.

Market participants await details of the BOJ’s bond buying operations for next month due later in the day. The central bank increased the amount of bonds it was planning to buy at scheduled operations on Wednesday, which followed emergency bond buying in two straight sessions last week.

The two-year JGB yield fell 0.5 basis point to -0.050 per cent.

The five-year yield rose 0.5 basis point to 0.070 per cent.

Benchmark 10-year JGB futures rose 0.11 point to 148.77, with a trading volume of 20,313 lots. REUTERS