TOKYO: Benchmark Japanese government bonds and futures erased a brief spike following the Bank of Japan's decision to ease policy on Wednesday, as investors digested the likely market impact of the central bank's move.
Futures, which initially surged after the BoJ's move, dipped in and out of negative territory, while 30-year JGBs extended their morning losses.
The BoJ increased its asset buying and loan programme by 10 trillion yen ($127 billion) to 80 trillion yen, with the increase earmarked for purchases of government bonds and treasury discount bills.
"All in all, it is supportive for the market but with steepening pressure on the curve," said Neale Vincent, strategist at Nomura Securities.
"The supply/demand issue with the JGB curve is that the BoJ is buying a lot in the front end, and there's too much investor demand in the middle of the curve but not enough demand in the back end of the curve. This makes it even worse," he added.
The 10-year JGB futures contract for December was up 0.01 point at 143.66 after dropping as low as 143.60.
The contract ended morning trade up 0.02 point at 143.67, and rose as high as 143.90 soon after the central bank's decision.
The yield on the benchmark 10-year cash bond fell half a basis point to 0.805 percent after dropping as low as 0.795 percent after the BOJ's announcement, moving away from a three-week intraday high of 0.835 percent hit on Thursday.
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