Japan’s 10-year government bond yields hit BOJ’s policy ceiling first time since June

JAPAN’S 10-year government bond (JGB) yields rose above the Bank of Japan’s (BOJ) policy band for the first time in four months ahead of the central bank’s policy meeting next week.

The 10-year JGB yield rose to 0.255 per cent, exceeding 0.250 per cent, top end of the BOJ’s policy limit under its yield curve control programme, for the first time since Jun 17. The yield immediately fell back to 0.250 per cent.

“It is very unlikely that the BOJ would alter its policy next week, but there were some traders who wanted to test the central bank’s commitment,” said Takayuki Miyajima, senior economist at Sony Financial Group.

“Because overseas yields have risen and the yen has weakened so much.”

The BOJ remains an outlier among a global wave of central banks tightening monetary policy to combat soaring inflation, as it focuses on underpinning a fragile economy.

The difference in the policies have driven sharp yen falls, sending it another 32-year low against the US dollar on Wednesday (Oct 19) amid risk of intervention from the Japanese authorities.

The 20-year JGB yield rose 1 basis point to 1.125 per cent, its highest since September 2015, hitting a seven-year high for a second straight session.

Yields on shorter-ended notes also rose, with the five-year yield climbing 1.5 basis point to 0.105 per cent, its highest since August 2015.

The two-year JGB yield rose 1.5 basis point to -0.04- per cent, its highest since September 29.

The 30-year JGB yield fell 0.5 basis point to 1.505 per cent.

The 40-year JGB yield fell 0.5 basis point to 1.735 per cent. Benchmark 10-year JGB futures fell 0.10 point to 148.17, with a trading volume of 8,622 lots. REUTERS