TOKYO: Long-dated Japanese government bond yields pushed to a fresh all-time high on Wednesday after what analysts called a “weak” result in the Bank of Japan’s regular debt purchase operations.
The poor showing highlights the fragility of the so-called super-long bond sector, where a dearth of buyers has resulted in yields grinding to new record peaks on a near daily basis in recent weeks.
The 30-year JGB yield climbed 2 basis points (bps) to an unprecedented 3.22% in the Tokyo afternoon, after the central bank announced the results of its buying operation.
Bond yields rise when prices fall.
Results for purchases of bonds with 25 or more years to maturity were “weak”, even though results for purchases of shorter maturities were “relatively well-anchored”, highlighting the structural challenges for the super-long sector, said Naomi Muguruma, chief fixed income strategist at Mitsubishi UFJ Morgan Stanley.
“Too much supply relative to demand is the underlying problem, and that’s not going to change for a long time,” she said.
“The super-long sector will be fragile for the time being.”
The 10-year JGB yield had risen to the highest since 2008 in the morning at 1.625%, but retreated to be flat on the day at 1.62% after the purchase operation results were announced.
The 20-year JGB hadn’t traded as of 0524 GMT.
The five-year yield was flat at 1.155%, while the two-year yield eased 0.5 bp to 0.865%.
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