Japan's 10-year bonds untraded as investors digest reports of new BOJ governor

JAPAN’S 10-year government bonds were untraded on Monday (Feb 13) as investors anticipated the next governor of the Bank of Japan may not be as hawkish as expected.

The 10-year JGBs were not traded and the yield was flat at 0.490 per cent as of Friday’s close.

The yield hit 0.5 per cent, the upper end of the BOJ’s policy band, in the night session after a report said the Japanese government was set to appoint economist Kazuo Ueda as the central bank’s next governor.

“Investors who didn’t know who Ueda was sold 10-year bonds on Friday but today they digested the news,” said Kazuhiko Sano, strategist at Tokai Tokyo Securities.

“They are not attacking the YCC (yield curve control) today. Ueda is a dove.”

Yields on super-long dated notes fell after a firm out come of the Ministry of Finance’s liquidity-enhancing auction.

The 20-year JGB yield 3 basis points to 1.305 per cent, while the 30-year JGB yield fell 5.5 basis points to 1.495 per cent.

The 40-year JGB yield fell 6 basis points to 1.735 per cent.

The five-year yield fell 1.5 basis points to 0.185 per cent.

SEE ALSO

Japan’s 10-year bond yield hits BOJ policy limit on new governor report

“Overall the market was underpinned by the firm auction, as well as the view that Ueda would be a dovish governor,” said Makoto Suzuki, senior bond strategist at Okasan Securities. Benchmark 10-year JGB futures rose 0.1 yen to 146.64, with a trading volume of 10,173 lots. REUTERS