JGB yield curve steepens as longer maturities track Treasuries

21 Nov, 2016

TOKYO: Benchmark Japanese government bonds inched up on Monday, while the yield curve steepened as longer maturities tracked sagging global bond prices.

The benchmark 10-year JGB yield shed 1 basis point (bp) to 0.025 percent, moving away from a nine-month high of 0.040 percent touched on Friday.

December 10-year JGB futures finished up 0.13 point at 150.43.

But the 30-year yield climbed 1.5 bps to 0.615 percent, after rising as high as 0.625 percent earlier, its highest since March.

Last week, the Bank of Japan unexpectedly announced its first special fixed-rate buying operation under its revamped monetary policy framework outlined in September. The BOJ adopted a strategy of JGB yield curve control, under which it guides the benchmark 10-year yield to around zero percent.

Bank of Japan board member Takako Masai said in a speech on Monday it was too early to conclude that the BOJ's new fixed-rate debt-buying operation would always go smoothly, but that the policy tool was successfully used last week to slow gains in yields.

JGB yields have felt upward pressure from U.S. Treasury notes, as investors dumped U.S. government debt after the Nov. 8 U.S. presidential election.

Yields on all U.S. maturities marked their largest two-week gains in more than five years, with the yield on U.S. benchmark 10-year Treasury notes logging a one-year high of 2.364 percent on Friday.

Copyright Reuters, 2016

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