TOKYO: Japanese government bond (JGB) yields fell on Tuesday, as investors expected the Bank of Japan (BOJ) to maintain its ultra-loose monetary setting unchanged at the end of the policy meeting.
Market players are looking for any signs for the timing of the policy shift from Governor Kazuo Ueda, as they expect the BOJ would end its negative rate policy in March or April at the earliest.
“The consensus is that the BOJ would end its negative rate policy by July at the latest and market players want to see if Ueda makes any remarks that acknowledge that consensus,” said Hideki Shibata, a senior strategist at Tokai Tokyo Research Institute.
The 10-year JGB yield fell 1 basis point (bp) to 0.64% in early trade.
The 20-year JGB yield fell 3 bps to 1.42%. Expectations of a January policy shift have receded after a devastating earthquake that hit western Japan on New Year’s day.
JGB yields edge lower as investors await BOJ decision
“The market expects no change in the policy, so if Ueda makes any surprise comments, the yields could make a big move,” said Shibata, adding that recent weakness in the yen could prompt Ueda to turn hawkish.
The yen languished near a two-month low on Tuesday, as it continues to be weighed down by the stark interest rate differentials between Japan and the United States.
The 30-year JGB yield fell 3 bps to 1.735%.
The five-year yield was flat at 0.24%.
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