TOKYO: Japanese government bond (JGB) yields fell for the third-straight day on Wednesday, tracking their US peers down ahead of an auction for 20-year JGBs.
The 10-year JGB yield was last down 5 basis points (bps) at a session low of 0.685%, slipping further from a near one-month high of 0.800% hit on Friday.
JGBs yields were weighed down by a decline in US Treasury yields, which dipped overnight.
The US 10-year yield last around 4.2% during Asian trading hours.
The two-year JGB yield edged down 2 bps to 0.045%, while the five-year yield fell 4 bps to 0.270%.
The largest drop came in the superlong end, where the 20-year JGB yield declined 7.5 bps to 1.425% ahead of an auction for the bond scheduled for Thursday.
“The poor auction results for 30-year JGBs (last week) was a shock, so there’s a sense that a little caution is necessary regarding this 20-year (bond auction),” said Hiroshi Namioka, chief strategist at T&D Asset Management.
The bid-to-cover ratio, which compares total bids to the amount of securities sold and acts as a measure of demand, at this month’s 30-year auction was the lowest since 2015. The 30-year JGB yield fell 8 bps to 1.645%.
JGB yields rise as investors weigh bets on BOJ moving away from negative rates
The 40-year JGB yield was last 9.5 bps lower at 1.875%.
Expectations that the BOJ could exit from negative interest rates at its December monetary policy meeting caused a jump in JGB yields last Thursday, but those expectations have largely faded as media reports this week suggested the bank isn’t in a hurry to move just yet.
Eyes will now be on BOJ Governor Kazuo Ueda at next week’s monetary policy meeting, where he is expected to keep alive prospects of an end to negative rates while hosing down excitement that such a move is imminent.
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