JGB yields fall after better-than-expected auction outcome

April 07, 2023 04:42 PM AEST | By Reuters
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TOKYO, April 7 (Reuters) - Japanese government bond (JGB) yields fell on Friday, with sentiment underpinned by a better-than-expected outcome of a 30-year bond auction in the previous session.

The 30-year JGB yield fell 3.5 basis points (bps) to 1.305% and the 40-year JGB yield fell 4 bps to 1.500%.

The 20-year JGB yield fell 2.5 basis points to 1.060%. "Demand for the 30-year note auction in the previous session was firm, so investors bought back bonds they sold ahead of the auction," said Shinji Ebihara, a rates strategist at Barclays Securities Japan.

The 10-year JGB yield fell 0.5 basis point to 0.460%.

"The 10-year bond yield rose this week as investors tested the Bank of Japan's defence in its yield curve control (YCC) policy, and the notes have become cheap compared to overseas peers whose yields were on the decline," said Ebihara.

"But the rationale for an immediate change in the YCC has weakened," he said.

The 10-year bond yield has risen by as much as 12.5 bps this week to 0.465% ahead of the change in the leadership at the central bank.

Kazuo Ueda, a former BOJ policy board member, will succeed incumbent BOJ Governor Haruhiko Kuroda whose second five-year term ends on Saturday, and will chair his first policy meeting on April 27-28.

The five-year yield was flat at 0.145% ahead of an auction for the bonds with the same maturity next week.

The two-year JGB yield fell 1 bp to -0.060%.

Benchmark 10-year JGB futures barely moved at 147.66, with a trading volume of 6,566 lots. (Reporting by Junko Fujita; Editing by Krishna Chandra Eluri)


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