Japan's 10-year bond yield rises amid weak auction results

April 04, 2023 03:29 PM AEST | By Reuters
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TOKYO, April 4 (Reuters) - Japan's 10-year government bond yield rose on Tuesday as an auction witnessed weak demand amid uncertainty about the Bank of Japan's ultra-low rate policy.

The 10-year JGB yield rose 1 basis point (bp) to 0.375%, its highest since March 10.

The auction for the 10-year bonds received bids worth 3.77 times the amount sold, significantly lower than a ratio of 7.55 times seen at the previous auction.

The auction's tail, or the gap between lowest and average price, widened to 0.11 point from zero point at the previous auction, another sign of weak demand.

"The BOJ has a good chance of tweaking its yield curve control policy by June, so investors did not want to add the 10-year bonds to their portfolios at the beginning of the fiscal year," said Ataru Okumura, a strategist at SMBC Nikko Securities.

"The BOJ may not absorb all of the 10-year bonds from the market via its regular bond buying after cutting the minimum size of the planned JGB purchases."

The central bank last Friday reduced the minimum size of its planned JGB purchases for all maturities over the next three months, while boosting the maximum size of the purchases.

Yields on other tenors rose, with the 20-year JGB yield climbing 3 bps to 1.095%. The 30-year JGB yield jumped 4.5 bps to 1.340%.

The 40-year JGB yield jumped 6 bps to 1.555%.

The two-year JGB yield rose 2 bps to -0.025% and the five-year yield rose 2.5 bps to 0.140%.

Benchmark 10-year JGB futures fell 0.16 yen to 147.55, with a trading volume of 16,850 lots. (Reporting by Junko Fujita, additional reporting by Tokyo markets team; Editing by Subhranshu Sahu)


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