TOKYO: Japanese government bond yields moved without a clear direction on Tuesday, amid conflicting messages from top Bank of Japan officials and ahead of the US Federal Reserve’s closely watched Jackson Hole symposium later in the week.
Benchmark 10-year JGB futures rose 0.04 yen to 144.76 as of 0512 GMT, taking cues from an overnight decline in US yields.
Cash 10-year JGB yields were flat at 0.885%, after oscillating between small increases and decreases earlier in the session.
Ten-year Treasury yields declined overnight as traders looked ahead to Fed Chair Jerome Powell’s keynote speech at Jackson Hole on Friday for clues on the pace and scale of interest rate cuts, with a first reduction expected at the mid-September policy meeting.
The outlook for monetary policy at home is even murkier. After BOJ Governor Kazuo Ueda surprised investors by striking a hawkish posture at the end of last month, sending the yen soaring, his influential deputy Shinichi Uchida appeared to backtrack just days later by saying the BOJ wouldn’t tighten policy when markets are volatile.
“JGBs are really hard to trade for foreign investors, considering the communication from the BOJ has been a bit difficult to comprehend,” said Shoki Omori, chief Japan desk strategist at Mizuho Securities.
“Nowadays, I don’t think a lot of people are trading JGBs on macro. It’s really about supply and demand.”
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The 20-year JGB yield initially fell as much as 1.5 basis points (bps) to 1.705% after solid demand at an auction of the securities, but then drifted back up to last be 0.5 bp higher at 1.73%.
The 30-year yield rose 1.5 bps to 2.085%.
The five-year yield was flat at 0.505%, while the two-year yield eased 0.5 bp to 0.36%.
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