TOKYO: Yields of long- and superlong-term Japanese government bonds (JGB) slid on Wednesday as US Treasury yields edged down, while investors awaited the Federal Reserve’s first monetary policy decision of the year and remarks by Bank of Japan Deputy Governor Ryozo Himino this week.
The 10-year JGB yield was last flat at 1.19%, while 10-year JGB futures were up 0.03 points at 141.15 yen.
The 20-year JGB yield and 30-year JGB yield both fell 1 basis point to 1.875% and 2.23%, respectively.
US Treasury yields drifted higher on Tuesday, recovering from multi-week declines in the previous session as stocks stabilized following Monday’s rout, but ticked lower during Asian trading hours.
The benchmark 10-year Treasury yield was last marginally lower at 4.543% after ending Tuesday at 4.549%.
But moves in JGB yields were conservative with market players looking ahead to the Fed’s monetary policy decision due later on Wednesday.
It’s widely expected the Fed will hold interest rates steady, putting attention instead on any hints on whether a rate cut could happen soon.
Japan’s short-end JGB yields rise ahead of BOJ policy decision
JGB investors also have a speech by BOJ Deputy Governor Himino on Thursday on their radars this week as markets try to parse out the timing and extent of rate hikes going forward in Japan.
A changing of board members with academic Junko Koeda replacing incumbent board member Seiji Adachi has added to questions about the shape of Japan’s rate path will take, said Hiroshi Namioka, chief strategist at T&D Asset Management.
“It really feels like the reflationists (within the BOJ) are steadily disappearing,” he said.
With investors mulling these different factors, it will probably be difficult for yields to fall too far, Namioka added.
Elsewhere on the curve, the two-year JGB yield and five-year yield each rose 1 bp to 0.695% and 0.865%, respectively.
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