JGB yield curve steepens; BOJ intervention caps 10-year yield gains

[TOKYO] Japanese government bond (JGB) yield curve steepened on Thursday (Feb 17), as super-long tenors tracked US peers, while caution about the central bank intervening again to stop borrowing costs from rising further capped gains in benchmark 10-year bond yields.

The 30-year JGB yield jumped 5.5 basis points to fresh high of 0.985 per cent, the highest since February 2016. The 20-year JGB yield rose 3.5 basis points to 0.735 per cent, the highest since February 2017.

The 40-year JGB yield rose 3.5 basis points to 1.005 per cent, the highest since November 2018.

The 10-year JGB yield rose 0.5 basis point to 0.220 per cent, staying below the central bank's 0.25 per cent target since the Bank of Japan (BOJ) successfully defended its key bond yield target on Monday by offering to buy an unlimited amount of the 10-year debt at 0.25 per cent.

Takayuki Miyajima, senior economist at Sony Financial Group, said gains in yields on super-long bonds will slow down eventually, as there is a demand for super-long tenors from life insurers.

An auction for the 20-year debt earlier in the day also proved healthy demand for long ended notes, he added.

Demand at 20-year JGB auction earlier in the day increased from the previous sale, with the so-called bid-to-cover ratio improving to 3.39 times from 3.18.

The 2-year JGB yield rose one basis point to minus 0.015 per cent, its highest since January 2016.

The 5-year yield rose 0.5 basis point to 0.055 per cent, the highest since October 2015. Benchmark 10-year JGB futures rose 0.06 point to 149.96, with a trading volume of 26,408 lots. REUTERS