TOKYO: Japan’s 10-year bond yield on Thursday rose to its highest level since the Bank of Japan’s policy meeting last week, as investors stopped buying ahead of an auction for bonds with the same maturity.
The 10-year JGB yield rose 2.5 basis points to 0.460%, its highest level since the BOJ kept a trading band for the benchmark yield unchanged at the policy meeting on Jan. 18.
After the BOJ meeting, traders bought back 10-year bonds to cover short positions.
They had been aggressively selling the bonds on expectation the BOJ would widen the trading band for the 10-year bonds again, or abandon the YCC, the scheme the central bank uses to keep the yield low.
“Some investors stopped buying to cover short positions of 10-year bonds. They can buy 10-year bonds at an auction,” said Kentaro Hatono, fund manager at Asset Management One.
“Investors do not want to buy the bonds at 0.5% or lower because they believe that it is a matter of time the BOJ would abandon its YCC (yield curve control) policy.” The ministry of finance is scheduled to hold the auction for 10-year bonds on Thursday next week.
Japan 10 year bond yield tops BOJ policy ceiling despite bond-buying announcement
The 20-year JGB yield rose 1.5 basis points to 1.300%. Yields on longer-term notes fell, with the 30-year JGB yield falling 0.5 basis point to 1.515% and the 40-year JGB yield slipping 2.5 basis points to 1.775%.
The two-year JGB yield was flat at -0.015% and the five-year yield was flat at 0.180%.
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