SINGAPORE: Japanese government bond were broadly steady on Friday as traders consolidated positions while awaiting the new Bank of Japan Governor Kazuo Ueda’s first policy meeting next week.
The 10-year JGB yield fell 0.5 basis point to 0.465%, easing away from a one-month high of 0.48% touched earlier this week.
Ten-year interest rate swaps were at 0.65%.
They have traded in a wide range between 0.3% and 1.1% this year.
The 20-year JGB yield was flat at 1.125%, while the 30-year JGB yield rose 1 basis point to 1.355%.
The 40-year JGB yield was at 1.540%. Data on Friday showed Japan’s consumer inflation held steady above the central bank’s target in March and an index excluding fuel costs rose at the fastest annual pace in four decades.
The data is likely to keep alive market expectations that the BOJ could begin to phase out later this year a massive stimulus programme that has drawn public criticism for distorting bond markets and crushing financial institutions’ margins.
The meeting next week though might be too soon for the unwinding to happen.
Japanese government bonds squeezed as market waits on Ueda
Nearly 90% of economists polled by Reuters said the Bank of Japan will not start unwinding its ultra-easy policy at the April 27-28 meeting.
Mizuho analysts said Governor Ueda is well aware of the BOJ’s past failures in the conduct of monetary policy, and the political heat they have generated.
“We think he will steer a more cautious and dovish (path) than market participants have been anticipating,” they said. Benchmark 10-year JGB futures rose 0.22 yen to 147.7, hovering close to a one-week high.
The two-year JGB yield rose 0.5 basis point to -0.040%.
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