TOKYO: The Japanese government bond yield curve steepened on Friday, as investors sold super-long dated bonds ahead of the Bank of Japan’s (BOJ) announcement of its quarterly bond-buying plans later in the day.
The 30-year JGB yield rose 3 basis points (bps) to 2.285% and the 40-year JGB yield rose 3 bps to 2.625%.
“Investors were worried that the BOJ may cut the purchase amounts of bonds with those maturities,” said Katsutoshi Inadome, senior strategist at Sumitomo Mitsui Trust Asset Management.
The worries stem from the fact that the central bank has kept the purchase amounts for super-long dated bonds unchanged even after its quantitative tightening (QT) plan in July, said Inadome.
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The BOJ is under pressure to reduce its holdings as it now owns roughly half of total JGBs after aggressive purchases under its ultra-loose monetary policy.
“The issuance for those bonds are small, so any such cuts could impact their yields, particularly when demand for those from life insurers weakened,” said Inadome.
The Ministry of Finance on Friday said it would reduce the sales of super-long bonds, with maturities of 30 and 40 years.
The 10-year JGB yield rose 1 bp to 1.095%.
The two-year JGB yield rose 0.5 bp to 0.61% and the five-year yield rose 1.5 bps to 0.75%.
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