TOKYO: The Bank of Japan bought 300 billion yen ($2 billion) of bonds with maturities between 5 and 10 years on Friday, intervening in the market to bring down government bond (JGB) yields which hit their highest in a decade.
The 10-year bond yield rose to 0.770%, its most since September 2013, after the BOJ last week decided to keep its ultra-low rate policy unchanged, which has helped the yen fall to an 11-month low against the dollar this week.
“The BOJ wanted to reiterate its stance to contain rises in the 10-year yield as it approached closer to 1%,” said Keisuke Tsuruta, fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities.
“Today the central bank prioritised the yields over the yen,” Tsuruta added.
The 10-year yield inched lower after the BOJ announcement to 0.765%, while the yen remained roughly flat against the dollar.
The BOJ in July set a de-facto cap on the 10-year bond yield of 1.0% but kept its allowance band at 50 basis point at either side of its 0% target.
Yields across the curve rose on Friday to track US Treasury yields.
The 20-year JGB yield was up 1 bp at 1.480%, after hitting 1.485%, its highest since May 2015.
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The 30-year JGB yield rose 1.5 bps to 1.735%, its highest since Dec. 2013.
The two-year JGB yield was last seen at 0.050%, up 0.5 bps from the previous session.
The five-year yield was up 1 bp at 0.315%, its highest since Jan. 17.
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