TOKYO Dec 14 Superlong Japanese government bond
prices rose on Wednesday, sending yields skidding from recent
highs after the Bank of Japan increased purchases in that zone
as part of its regular buying operations.
A BOJ official said the increase was aimed at steering the
JGB yield curve toward what the central band deems appropriate,
and that the move took into account recent rapid rises in
super-long yields and the possibility of further volatility.
Under its current monetary policy framework of "yield curve
control" unveiled in September, the BOJ aims to guide the
10-year JGB yield to around zero percent.
"It was a surprise, as generally the BOJ does not offer to
buy superlong JGBs the day ahead of a 20-year auction," said
Keiko Onogi, senior strategist at Daiwa Securities.
"We don't know if the BOJ will continue to provide this kind
of surprise to the market," she said. "It could make it harder
for us to predict the BOJ's buying schedule."
On Thursday, the Ministry of Finance will hold a regular
auction for 1.1 billion yen ($9.56 million) of 20-year JGBs.
Superlong JGB yields have risen to multi-month highs in
recent sessions, tracking higher global yields. Yields on U.S.
Treasuries have soared since the Nov. 8 election of Donald
Trump, who market participants expect will adopt reflationary
Later on Wednesday, the Federal Open Market Committee (FOMC)
is widely expected to raise its interest rate target by 0.25
percentage point to 0.50-0.75 percent at the conclusion of its
two-day policy meeting, and could signal further hikes ahead.
"Just in case Treasury yields resume their rise after the
FOMC, the BOJ took action today to lower long-term yields," said
Yutaka Miura, a senior technical analyst at Mizuho Securities.
Last month, as JGB yields faced upward pressure following
Trump's victory, the BOJ offered to buy an unlimited amount of
5-year JGBs at minus 0.04 percent and 2-year JGBs at minus 0.09
percent, to prevent yields in those zones from rising.
On Wednesday morning, the BOJ offered to buy 120 billion yen
of JGBs with over 25 years left to maturity. It also offered to
buy 200 billion yen of JGBs with between 10 and 25 years left to
The 30-year yield, which touched its highest
levels since mid-March in the previous session, shed 7.5 basis
points (bps) to 0.730 percent. It fell to a session low of 0.725
percent from an earlier session high of 0.785 percent before the
The benchmark 10-year yield fell 2 bps to
0.060 percent, moving away from a 10-month peak of 0.080 percent
marked this week, while 10-year JGB futures finished up
0.15 point at 149.97.
($1 = 115.0600 yen)
(Reporting by Tokyo markets team)