TOKYO: Japanese government bond (JGB) yields inched down on Monday as investors awaited the Bank of Japan’s (BOJ) monetary policy decision at the end of its two-day meeting starting Dec. 18.
The 10-year JGB yield fell 2 basis points (bps) to 0.685% after edging up on Friday.
Although most market participants no longer expect the Japanese central bank to exit from negative interest rates this month, investors were moving cautiously ahead of the bank’s decision.
On the superlong end, the 20-year JGB yield last fell 0.5 bps to 1.420%, while the 30-year JGB yield ticked down 0.5 bps to 1.620%.
Expectations of an imminent change faded away after a Bloomberg report of the central bank being in no hurry to exit from its ultra-easy monetary policy, shifting the focus to when the BOJ might make a move to end it in 2024.
More than a fifth of economists in a Reuters poll said the BOJ will begin unwinding as early as January, with over 80% expecting the central bank to ditch negative interest rates by the end of next year.
Japan’s 10-year yield rise on caution ahead of BOJ decision
All eyes will be on BOJ Governor Kazuo Ueda during the press conference at the conclusion of the bank’s two-day policy meeting, in which he is expected to keep alive the prospects of an end to negative rates while also hosing down some of the recent excitement.
Ueda’s comments are likely to include a hint as to when the central bank plans to normalise policy to avoid surprising markets in the future, said Katsutoshi Inadome, senior strategist at Sumitomo Mitsui Trust Asset Management.
“If (the BOJ) does intend to make a major change in January, I think there will be some kind of indication” on Tuesday, he said.
The two-year JGB yield was last 0.5 bps higher at 0.090%.
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