TOKYO: Japan’s 10-year government bond yield fell to a nearly one-month low on Monday on investors’ relief about the Bank of Japan (BOJ) continuing its ultra-low rate policy and as the need for adjusting portfolios boosted demand.
The 10-year JGB yield fell 1 basis point (bps) to 0.390%, its lowest level since May 23.
The BOJ maintained its ultra-easy monetary policy on Friday despite stronger-than-expected inflation, signalling it will remain a dovish outlier among global central banks and focus on supporting a fragile economic recovery.
“Also, there is demand for buying JGBs as funds are trying to rebalance their portfolios toward the end of the quarter as a sharp rally in stocks boosted the value of their equities,” Hiroshi Namioka, chief strategist and fund manager, T&D Asset Management.
There will be around 4 trillion yen ($28.27 billion) worth of demand to buy JGBs in the next two weeks from various Japanese funds, including pension funds, while they could sell as much as 6 trillion yen worth of sale of stocks, Naimoka added.
Japan’s Nikkei share average jumped nearly 20% in the latest quarter to hit a 33-year high.
The 20-year JGB yield fell 0.5 bps to 0.985%.
The 30-year yield fell 0.5 bps to 1.225%.
The 40-year JGB yield was flat at 1.380%.
The five-year yield was flat at 0.075% and the two-year JGB yield was also flat at -0.070%.
The 10-year JGB futures rose 0.08 yen to 148.4.