TOKYO: Japanese government bonds firmed on Wednesday, as investors cover their short positions ahead of the outcome of the US Federal Reserve's policy meeting later in the session.
The Fed is expected to hold steady at the end of its two-day meeting, which will be followed by a Fed Chair Janet Yellen's news conference. Investors will be watching for updates of Fed members' economic projections and any hints as to the outlook for US monetary policy.
The Bank of Japan's purchases also underpinned the JGB market. The central bank offered to buy 450 billion yen ($3.97 billion) of 5-year to 10-year JGBs, 420 billion yen of 3-year to 5-year JGBs, and 400 billion yen of 1-year to 3-year JGBs under its massive asset purchase programme.
JGB yields have been under pressure since the BOJ adopted negative interest rates on Jan. 29, under which banks have to pay interest on certain deposits held at the central bank.
On Wednesday, BOJ Governor Haruhiko Kuroda told parliament on Wednesday that there is room to slash interest rates to around minus 0.5 percent, though said he cannot indicate which policy tools the central bank would use in case it decided to expand stimulus again.
Weaker stock prices also increased the appeal of fixed-income assets. The Nikkei stock index ended down 0.8 percent.
The 10-year JGB yield fell 2.5 basis points to minus 0.050 percent.
In the superlong zone, the 20-year JGB yield fell 2.5 basis points to 0.430 percent.
The benchmark 10-year JGB futures rose 0.38 point to 151.27.
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