TOKYO: Japanese government bonds moved in a narrow range on Tuesday as traders weighed reports about lawmakers considering a possible buyback of longer-dated debt and fresh stimulus measures.
The 30-year JGB yield fell to as low as 2.86% earlier in the session.
It was last trading at 2.92%, up 1 basis point (bp) from the previous session. Yields move inversely to prices.
Reuters reported that Japan is considering buying back some super-long government bonds issued in the past at low interest rates.
The move shows the finance ministry’s willingness to improve demand for bonds with super-long maturities, whose yields touched record highs last month, said Naoya Hasegawa, chief bond strategist at Okasan Securities.
The latest report comes as the market awaits details of the ministry’s bond sale plans. Reuters reported last month that it was considering a cut in the sale of super-long bonds.
The Ministry of Finance, which oversees the government’s debt issuance, will reach a final decision on the buybacks after holding meetings with bond market participants on June 20 and June 23, the sources told Reuters.
Meanwhile, local media reported on Tuesday that Japan’s ruling coalition agreed to include a plan to distribute cash handouts in their election campaign pledges.
The move, which adds to concerns over the government’s already tattered finances, prompted investors to sell shorter-dated bonds, said Katsutoshi Inadome, senior strategist at Sumitomo Mitsui Trust Asset Management.
JGB yields track US peers higher after resilient labour data
The 10-year JGB yield rose to as high as 1.48%, before easing to 1.475%, up 0.5 bp from the previous session.
The five-year yield was flat at 1.03%, after rising to 1.04% earlier in the session.
“Without the report on bond buybacks, the JGBs could have seen a sell-off across the curve,” Inadome added.
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