April 28, 2020 / 6:22 AM / a month ago

JGBs tick up after BOJ increases bond purchase, Kuroda comments

April 28 (Reuters) - Japanese government bond prices edged up on Tuesday as the central bank increased the amount of its JGB purchases, a day after it unveiled a raft of stimulus including more buying of government and corporate debt to support the coronavirus-hit economy.

The Bank of Japan pledged on Monday to aggressively buy an unlimited amount of government paper, scrapping its previous guidance that set an annual limit of 80 trillion yen.

In line with other major central banks’ moves to alleviate the pandemic-induced strain on financial markets, the BOJ increased the amount of 1-3 year bonds it offered to buy to 340 billion yen, 3-5 year bonds to 300 billion, and 5-10 year bonds to 370 billion yen in its operation on Tuesday.

But some analysts said the size of the increase, which marked a 20-billion yen boost for each of those maturities, was underwhelming.

“Their purchase increase wasn’t as aggressive as they said they would be,” said SMBC Nikko Securities’ rate strategist Souichi Takeyama.

Some market analysts also speculate investors were encouraged to buy JGBs after BOJ Governor Haruhiko Kuroda told a news conference on Monday the bank would not “fret much” even if its long-term interest rates fall slightly below zero.

Benchmark 10-year JGB futures rose 0.07 point to 152.89, with a trading volume of 4,168 lots.

The 10-year JGB yield fell 1.5 basis points to minus 0.055%, while the 20-year yield also dropped 1.5 basis points to 0.295%.

The two-year JGB yield was flat at minus 0.175%, and the five-year yield fell 0.5 basis point to minus 0.170%. (Reporting by Eimi Yamamitsu Editing by Shri Navaratnam)

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