TOKYO: Japanese government bond (JGB) yields were almost flat on Monday as investors awaited a series of market-moving cues this week, including a 10-year JGB auction and Federal Reserve Chair Jerome Powell’s testimony.
The 10-year JGB yield inched down 0.5 basis point (bp) to 0.71% and the five-year yield was down 0.5 bp at 0.365%. The yields on other maturities were flat.
“The yields hardly moved today as the market braced for various events,” said Katsutoshi Inadome, a senior strategist at Sumitomo Mitsui Trust Asset Management.
Bank of Japan (BOJ) Governor Kazuho Ueda will speak at a fin-tech event FIN/SUM 2024 and the finance ministry will hold an auction for 10-year JGBs on Tuesday.
Federal Reserve Chair Jerome Powell will testify before lawmakers on Wednesday and Thursday.
The two-year JGB yield hit a near 13-year high last week after BOJ board member Hajime Takata’s hawkish comments fuelled speculation the BOJ would end the negative rate policy as early as March.
Takata said the BOJ must consider overhauling its ultra-loose monetary policy as Japan is finally seeing prospects for achieving the central bank’s 2% inflation target.
Japan’s 2-year bond yield hits near 13-year high after BOJ policymaker’s hawkish comments
Soon after, Governor Ueda reiterated his stance, saying it was too early to conclude that inflation was close to sustainably meeting the 2% target.
“The BOJ policymakers made comments in two different directions. That is aimed at making it difficult for the market to guess exactly in which month the BOJ would tweak its negative rate policy,” Inadome said.
“That way the BOJ can minimize the surprise when it does not tweak the policy in March.”
With prices rising steadily, over 80% of economists expect the BOJ to end negative rates in April, according to a Reuters poll taken on Feb. 15-20, with some betting on the chance of action in March.
The BOJ will hold a policy meeting on March 18-19.
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