TOKYO: Japanese government bond prices rose on Tuesday, with the 10-year yield hitting a near-decade low for a fourth straight day after Bank of Japan chief Haruhiko Kuroda said buying longer-dated debt was a policy option to pursue monetary easing.
Buying in the longer-dated sectors by pension funds and life insurers ahead of Japan's fiscal year-end on March 31 also helped flatten the yield curve.
Kuroda, who became the BOJ governor last week, told parliament that extending the duration of JGBs the central bank targets to five years, from the current three years, to ease monetary policy would be among future policy options.
The 10-year yield fell 2.5 basis points to 0.530 percent after earlier dropping to 0.525 percent, its lowest level since June 2003.
Ten-year futures hit a record high of 145.95. They ended the morning session at 145.87, up 0.20 point in relatively heavy volume, with 17,654 contracts changing hands, up from Monday's full day of 17,089 contracts.
"Demand in trust banks and lifers should be temporary in nature. If this demand disappears after the fiscal year begins, then JGB yields might see some rebound," said Yuya Yamashita, rates strategist at J.P. Morgan in Tokyo.
"Still, it will depend on how much the BOJ will buy after April. But as long as the amount of the JGB purchases is limited to the prior market consensus, and if the seasonal demand for lifers and trust banks disappears, the JGB yields will rebound."
The BoJ is scheduled to hold its next policy-setting meeting on April 3 and 4.
The 20-year yield slipped 2 basis points to 1.420 percent and the 30-year yield eased 1 basis point to 1.545 percent. They also both reached a near-decade trough.
The five-year yield was unchanged at 0.120 percent, not far from its record low of 0.095 percent.
The spread between five- and 10-year yield fell to 41 basis points, its narrowest since October 2008.
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