TOKYO: Japanese government bond prices firmed on Thursday, helped by a fall in short-term interest rates following the start of the Bank of Japan's negative interest rates as well as demand from foreign investors.
The yield on the benchmark 10-year JGBs fell 3.0 basis points to 0.015 percent, edging back near zero, with bonds of up to nine-and-a-half years trading at negative yields.
The two-year bond yield fell 4.0 basis points to minus 0.190 percent, as short-term interest rates fell deeper into negative levels following the start of negative interest rates on a portion of excess reserves at the BOJ.
The three-month repo rate fell to a record low of minus 0.150 percent, partly as investors expect further monetary easing from the BOJ in coming months.
Some buying came from foreign investors, who can borrow the yen at deeply negative interest rates using swaps, market players said.
The auction of five-year JGBs drew tepid demand because few Japanese investors were willing to buy at current negative yields but the results did not have a lasting impact.
The auction produced the tail, or gap between the lowest and average price, of 0.09, much higher than 0.01 in the previous auction.
Some market players were bidding for bonds, hoping to sell them into the BOJ's next bond buying, which they expect to come on Friday.
The 10-year JGB futures price rose 0.24 point to 151.38 .
Comments
Comments are closed for this article.