TOKYO, Sept 16 Japanese government bond yields
rose slightly on Friday across the yield curve as market players
squared their positions ahead of a long weekend and the Bank of
Japan's policy review next week.
The benchmark 10-year JGB yield rose 1.0
basis point to minus 0.035 percent, though it was down 1.5 basis
points on the week.
Yields on shorter maturities rose, stepping back from
six-week lows touched earlier this week.
The short-term yields had dropped on expectations that the
BOJ could cut interest rates further from the current target of
minus 0.10 percent as early as next week.
The five-year yield rose 1.0 basis point to minus 0.200
percent, off Thursday's six-week low of minus
0.215 percent while the two-year yield ticked up
1.0 basis point to minus 0.265 percent after having dipped to as
low as minus 0.280 percent earlier this week.
Yields on longer-dated bonds, which have suffered from
expectations the BOJ will likely aim to steepen the yield curve
to reduce the pain on financial institutions from its negative
interest rates, also edged up.
The 20-year yield rose 0.5 basis point to 0.450 percent
, though it was still below Wednesday's six-month
high of 0.495 percent.
The 30-year yield rose one basis point to 0.555 percent
, though it stayed below Wednesday's 0.605
While the BOJ is widely expected to combine a cut in
short-term rates with an attempt to steepen the yield curve,
possibly by making its bond buying target more flexible, in its
next easing, market players say uncertainty surrounding its
policy meeting on Sept 20-21 is unusually large.
Some investors doubt the BOJ will act next week, given that
there has been little change in Japan's economic fundamentals
since the last policy meeting.
It is not exactly clear how the BOJ can control the longer
end of the yield curve if it wished to, as long-date bond yields
tend to be influenced not just by the central bank's policy but
also other factors, including inflation expectations, bond
yields in other countries and the strength of demand from
Many traders say, therefore, they want to have a neutral
position, going into the BOJ's meeting, which starts on Tuesday
after a public holiday on Monday.
The 10-year JGB futures price dipped 0.02 point to 151.70
(Reporting by Hideyuki Sano; Editing by Jacqueline Wong)