SINGAPORE: Japanese government bonds were boxed in a tight range on Friday, supported by Bank of Japan’s bond buying even as the central bank said it will eventually scale back such purchases.
Benchmark 10-year JGB futures fell 0.07 yen to 145.34.
At the short end of the rates markets, the overnight call money rate was quoted at 0.074%, after having turned positive for the first time in 8 years on Thursday.
Money market yields have risen after Bank of Japan’s (BOJ) historic decision to end its negative rate policy on Tuesday and usher in a new era of monetary policy.
Meanwhile, the US Federal Reserve stuck to its line on inflation and projections for three interest rate cuts by the year’s end.
The dollar rally that ensued after the Fed and a sharp rate cut by the Swiss central bank pushed yen to a 4-month low.
JGB moves are limited because “the market has already digested all the market moving cues after the BOJ and Fed concluded their policy meetings,” a strategist at a domestic asset manager said.
Earlier in the day, the BOJ bought a wide range of government bonds in the medium-to-long-term and super-long-term zones as part of its money market operations.
Japan’s 10-year JGB yield rises ahead of BOJ policy decision
BOJ Governor Kazuo Ueda said on Friday the central bank will eventually scale back its government bond purchases, but will hold off on doing so for the time being.
It ended negative rates on Tuesday, setting the overnight call rate as its new policy rate to be in a range of 0-0.1%, but said then it will maintain the pace of bond purchases at roughly 6 trillion yen ($39.6 billion) per month.
The 10-year JGB yield rose 0.5 basis point to 0.745%.
Ten-year interest rate swaps were at 0.89%, while the one-month TONAR overnight-indexed swap was flat at 0.0601%.
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