TOKYO, Sept 21 Japanese government bond yields
rose on Wednesday after the Bank of Japan surprised markets by
saying it would aim to guide the 10-year bond yield to around
zero percent as part of an overhaul of its policy framework.
The benchmark 10-year JGB yield rose to as high as plus
0.005 percent, rising to a positive level for the
first time since mid-March.
It last stood at minus 0.035 percent, up 2.5 basis points on
the day, but trading was volatile as investors reacted to the
surprise decision, analysts said.
"I think the market's volatility will fall as the BOJ has
set the target for the 10-year yield... We are going to have a
government-controlled market," said Naoya Oshikubo, rates
strategist at Barclays.
The BOJ abandoned its base money target and set a zero
percent target for the 10-year yield. To guide the 10-year bond
yield, the BOJ will buy 10- and 20-year bonds at a price it set
if necessary, the bank said.
The longer end of the curve was volatile as market players
were not sure exactly where the BOJ is trying to guide their
The 20-year yield rose to as high as 0.450 percent
and last stood at 0.405 percent, flat on the day.
Yields on shorter maturities also rose as the BOJ refrained
from cutting short-term interest rates deeper into negative
The two-year yield rose 1.0 basis point to minus 0.260
(Reporting by Hideyuki Sano; Editing by Simon Cameron-Moore)