TOKYO: Japanese government bond yields rose on Tuesday and futures looked set to snap a seven-day winning streak as weak demand at an auction of 20-year bonds soured the mood.
The 10-year JGB yield rose 2 basis points (bps) to 0.37%, climbing off a nearly three-month low of 0.35% reached on Monday.
Benchmark 10-year JGB futures fell 0.19 yen to close at 148.82, retreating from a near-six-week high hit in the previous session.
The 20-year yield rose 1.5 bps to 0.955%. It touched a 3 1/2-month low of 0.94% at the start of the week.
A weak auction result was widely expected heading into the 1.2-trillion yen bond sale, according to several analysts.
Okasan Securities senior strategist Makoto Suzuki said before the auction, a sense of caution spread quickly to weigh on the entire market.
The 30-year JGB yield rose 0.5 bp to 1.185%, while the two-year JGB yield rose 0.5 bp to -0.08% and the five-year yield rose 0.5 bp to 0.05%.
JGB yields edge lower, futures rise amid bets for extended BOJ stimulus
Despite Tuesday’s rise, JGB yields are still very low, with the 10-year yield remaining far below the Bank of Japan’s policy ceiling at 0.5%.
That reflects the consensus view among market participants that a tweak to the BOJ’s yield curve controls, once expected as soon as this month, may be a long way off after new governor Kazuo Ueda adopted a resolutely dovish posture, according to Masayuki Kichikawa, chief macro strategist at Mitsui Sumitomo DS Asset Management.
“Most people now expect that the BOJ will not move in the next six months,” Kichikawa said.
“And if they don’t move in the next six months, what is the reason for them to move in the six months after that?”
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