TOKYO: Japan’s 10-year government bond yield (JGB) fell on Tuesday, as traders expected that an auction for the bonds with the same maturity later in the session would witness firm demand.
The 10-year JGB yield fell 0.5 basis point (bp) to 0.595%, after hitting a fresh nine-year high of 0.605% in the previous session, after the Bank of Japan (BOJ) set a de-facto policy ceiling of the benchmark at 1%.
“The auction is expected to have relatively firm demand, as market participants do not own enough bonds at the moment after the BOJ’s defence to contain yields low,” said Keisuke Tsuruta, fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities.
The BOJ in the previous session conducted an emergency bond buying after the 10-year yield crossed 0.6% for the first time since 2014.
The central bank also conducted its daily offer of unlimited bond buying twice on Friday, when the bank made a tweak to its yield curve control policy.
Japan yields hit 8-year high, spurring BOJ buying to slow ascent
The BOJ boosted the amounts of the purchase of 5-10 year JGBs to 675 billion yen ($4.73 billion) each time at its regular bond buying throughout July, up from 575 billion yen in June.
The Ministry of Finance is scheduled to hold the auction for about 2.7 trillion yen of 10-year bonds later in the session.
The 20-year JGB yield rose 2 bps to 1.250%.
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