Japanese government bond prices rose on Thursday, with longer-dated maturities supported as investors moved down the curve in search of higher yields. The benchmark 10-year yield dropped to as low as 0.315 percent, lowest since April 2013. March 10-year JGB futures rose 0.07 point to 147.80. Highlighting how low yields have become under the Bank of Japan's qualitative and quantitative easing policy, through which it buys large amounts of short-term debt, two-year government bonds were sold for the first time at negative yields.
The Ministry of Finance sold 2.5 trillion yen ($20.80 billion) of two-year JGBs in which the average accepted yield was -0.0030 percent. The result comes in the wake of the two-year yield dropping to a record low of -0.040 percent last week. Negative auction yields have moved steadily along the Japanese yield curve, with three-month and one-year bills already sold at sub-zero yields earlier this year. In Europe, the two-year German bund yield has spent most of its time since August beneath zero, while in the Swiss government debt market even the five-year yield has gone negative.
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