TOKYO: Japan’s mid-to-long-term government bond yields fell on Friday as the market saw it as less likely that the Bank of Japan (BOJ) will raise interest rates at its policy meeting next week.
The two-year JGB yield fell 1 basis point (bp) to 0.565%. The five-year yield fell 2 bps to 0.69%.
“Bets for the BOJ’s rate hike have been receding, while the BOJ’s bond-buying operation also supported the sentiment,” said Miki Den, senior Japan rate strategist at SMBC Nikko Securities.
The BOJ is leaning toward keeping interest rates steady as policymakers prefer to spend more time scrutinising overseas risks and clues on next year’s wage outlook, Reuters reported on Thursday.
This followed a Bloomberg News report on Wednesday that the BOJ sees “little cost” in waiting to hike rates.
Swap rates indicated a 22.86% chance of the BOJ raising rates by 25 bps to 0.5% this month, and a 65.5% probability of that move at its January meeting.
The BOJ earlier in the session offered to buy bonds with maturities from one to 25 years under its regular bond-buying operations.
JGB yields fall as BOJ rate hike bets recede
Yields on bonds with super-long maturities rose, rebounding from declines earlier in the week.
The 20-year JGB yield climbed 1 basis point to 1.855% and the 30-year JGB yield rose 1.5 bps to 2.25%.
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