TOKYO: Japanese government bond yields rose on Thursday following a report in the Yomiuri newspaper that the Bank of Japan will review the side effects of its massive stimulus at its meeting next week.
The report stoked already heated speculation that Japan’s central bank will more definitely shift away from monetary easing, after surprising markets last month by widening the band it allows the 10-year JGB yield to move around zero.
“It seems that (BOJ Governor Haruhiko) Kuroda has blinked and the market is smelling blood,” said Amir Anvarzadeh, a market strategist at Asymmetric Advisors. “We think that it’s inevitable that the quantitative easing will be abandoned at some stage … and abandoning quantitative easing outright could be very, very dangerous, because the bond market is very illiquid.”
The BOJ’s next policy decision is on Wednesday, although many market watchers don’t expect a significant shift until Kuroda steps down in March following two consecutive five-year terms.
JGB yields rise as consumer inflation in Tokyo exceeds BOJ target
Benchmark 10-year JGB futures ended the day down 43 yen to 145.17 and touched 145.11 for the first time since mid-2014. As of 0614 GMT, the 10-year JGB yield was flat at 0.500% - the upper limit of the BOJ’s curve control policy - for a fourth session.
The 20-year yield rose 7 basis points to 1.400%, its highest since September 2014. The 30-year yield rose a comparatively modest 4.5 basis points to 1.655%, held back by the strong auction of the previous session.
The two-year yield rose 1.5 basis point to 0.04%, while the five-year yield rose 3.5 basis points to 0.265%, its highest level since September 2013.
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