TOKYO: Japanese government bond (JGB) futures rose towards a five-month high on Wednesday and yields declined across most of the curve, as traders continued to pare back bets for a near-term hawkish shift by the Bank of Japan (BOJ).
Sentiment was also buoyed by a well-received auction of 20-year JGBs during the session, with the yield on the securities dropping 4 basis points to 0.965%.
Benchmark 10-year JGB futures rose 0.21 yen to 149.06, and went as high as 149.09, closing in on Friday’s peak of 149.21, a level not seen since Dec. 8. The 10-year yield fell 3 basis points to 0.36%, pulling further back from the BOJ’s policy ceiling at 0.5%.
“The expectations of a policy revision by the BOJ getting pushed back, it is becoming easier to buy on JGBs on dips,” said Makoto Suzuki, senior bond strategist at Okasan Securities.
JGB yields fall amid pause in US Treasury yield climb
In a sign it is in no rush, the BOJ last month tweaked its policy guidance to clarify that wage growth must accompany price rises for the central bank to consider phasing out stimulus.
BOJ Governor Kazuo Ueda repeated his view that the central bank needs to keep ultra-easy policy settings for the time being, expecting inflation to moderate later this year, in comments to his Group of 7 colleagues over the weekend.
The two-year JGB yield fell 0.5 basis point to -0.065%, while the five-year yield declined 1 basis point to 0.095%. The 30-year JGB yield was flat at 1.235%.
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