Japan’s 10-year bonds untraded as investors digest reports of new BOJ governor

TOKYO: Japan’s 10-year government bonds were untraded on Monday as investors anticipated the next governor of the Bank of Japan may not be as hawkish as expected.

The 10-year JGBs were not traded and the yield was flat at 0.490% as of Friday’s close. The yield hit 0.5%, the upper end of the BOJ’s policy band, in the night session after a report said the Japanese government was set to appoint economist Kazuo Ueda as the central bank’s next governor.

“Investors who didn’t know who Ueda was sold 10-year bonds on Friday but today they digested the news,” said Kazuhiko Sano, strategist at Tokai Tokyo Securities.

“They are not attacking the YCC (yield curve control) today. Ueda is a dove.” Yields on super-long dated notes fell after a firm out come of the Ministry of Finance’s liquidity-enhancing auction.

The 20-year JGB yield 3 basis points to 1.305%, while the 30-year JGB yield fell 5.5 basis points to 1.495%.

Japan’s 5-year bond yield rises even as BOJ offers loans to market

The 40-year JGB yield fell 6 basis points to 1.735%.

The five-year yield fell 1.5 basis points to 0.185%. “Overall the market was underpinned by the firm auction, as well as the view that Ueda would be a dovish governor,” said Makoto Suzuki, senior bond strategist at Okasan Securities.

Benchmark 10-year JGB futures rose 0.1 yen to 146.64, with a trading volume of 10,173 lots.