JGB yields edge up as market ponders BOJ policy outlook
By Brigid Riley
TOKYO, May 21 (Reuters) -Japanese government bond (JGB) yields inched up on Tuesday, with long and superlong yields reaching decade-highs as investors sought more signals on the Bank of Japan's (BOJ) policy outlook.
Despite a lack of new catalysts, JGB yields continued to climb after the BOJ unexpectedly cut offer amounts at a bond-buying operation last week, putting the market on edge.
The 10-year JGB yield JP10YTN=JBTC edged up 0.5 basis point (bp) to 0.980%, its highest since May 2013.
The 20-year JGB yield JP20YTN=JBTC rose 1 bp to a more than 11-year high of 1.790%.
Market participants have been speculating about additional interest rate hikes, which some believe could come as soon as July, with the BOJ under pressure as the yen slides to 34-year lows against the dollar.
They also remain wary of further cuts to the BOJ's bond purchases ahead of another bond-buying operation on Thursday.
The second workshop in a comprehensive review of the BOJ's monetary easing tools taking place on Tuesday added to the sense of caution.
The central bank is expected to scrutinise the effects and drawbacks of its radical stimulus measures, making investors question its implications for bond-buying.
The discussion "should support or justify the normalization process, basically," said Naka Matsuzawa, chief macro strategist at Nomura.
The BOJ has been an aggressive buyer over the years to defend its ultra-low rate policy, pushing its ownership to around half the entire market.
Meanwhile, responding to questions about Japanese government bond yields hitting over ten-year highs this week, Japanese Finance Minister Shunichi Suzuki said it is important for the government to closely monitor the market and communicate with traders.
The two-year JP2YTN=JBTC and five-year yields JP5YTN=JBTC were flat at 0.340% and 0.575%, respectively.
The 30-year JGB yield JP30YTN=JBTC ticked up 0.5 bp to 2.085%.
Reporting by Brigid Riley; Editing by Varun H K
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
