TOKYO: Japan’s 10-year government bond yield touched a one-week low on Friday, tracking US Treasury yield declines overnight, while firm outcome of an auction in the previous session underpinned sentiment.
The 10-year JGB yield fell to as low as 0.400% in early trade, its lowest level since May 24, before trading at 0.410% as of 0245 GMT, up 0.5 basis point from the previous session.
“Japan’s 10-year yield tracked US Treasury yields which fell overnight on expectation that the Federal Reserve will pause hiking interest rates,” said Takeshi Ishida, strategist at Resona Holdings.
“Also firm outcome of the auction for 10-year bonds in the previous session supported investor sentiment.
Varieties of brokers made bids to buy the securities.“
The yield will trade around 0.4% in the run up to the Bank of Japan’s policy meeting this month, said Ishida, as the yield for US 10-year Treasury yield might have peaked, while the chances for the BOJ to tweak its yield curve control policy is limited.
BOJ Governor Kazuo Ueda has repeatedly said the central bank will continue monetary easing until inflation will sustainably hit its 2% target.
On Friday, Ueda said the BOJ did not have a set time frame for achieving its 2% inflation target but that it would strive to hit it at the earliest date possible.
JGB yields edge higher as US debt deal cuts demand for bonds
The two-year JGB yield fell 0.5 bp to -0.070% and the five-year yield fell 0.5 bp to 0.070%.
The 20-year JGB yield was flat at 1.015%.
The 30-year JGB yield rose 1 bp to 1.270%.
The 40-year JGB yield rose 1.5 bps to 1.450%.
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