TOKYO: Yields on super-long Japanese government bonds (JGBs) fell sharply on Tuesday after Reuters reported the finance ministry may reduce the issuance of those bonds.
The 30-year JGB yield extended the declines, falling 12.5 basis points (bps) to 2.91%, its lowest since May 14.
The 20-year JGB yield fell 13.5 bps to 2.37%. Japan’s Ministry of Finance (MOF) will consider tweaking the composition of its bond programme for the current fiscal year, which could involve trimming the issuance of super-long bonds, two sources told Reuters on Tuesday.
The report came as the market expected the government to step in to curb the sell-off.
The yields on long-dated debt rose to record highs amid concerns over a drop in bond buying by the Bank of Japan (BOJ) and political jockeying over stimulus.
“The yields on bonds with super-long maturities extended declines (after the report), but those on shorter-dated bonds rose on concerns that the MOF may increase the sale of those bonds,” said Naoya Hasegawa, chief bond strategist at Okasan Securities.
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The 10-year JGB yield also extended declines, falling 4.5 bps to 1.46%.
If the MOF were to reduce issuance of 20-, 30- or 40-year Japanese government bonds, it would likely increase issuance of shorter-dated debt instead, the sources said.
The two-year JGB yield was last up 0.5 bp to 0.725%.
The five-year yield rose to 1.02%, before falling 0.5 bps to 1.005%.
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