TOKYO: Japanese government bond yields stabilised on Monday near the one-month lows reached after the Bank of Japan kept stimulus settings in place and signalled no rush to normalize policy.

The 10-year JGB yield was flat at 0.39% as of around 0500 GMT after earlier dipping to 0.38% for the first time since April 4.

The yield dropped from as high as 0.48% on Friday after the central bank opted to leave the cap at 0.5% under its yield curve control (YCC) framework while also announcing a policy review that could take as long as 1-1/2 years.

Benchmark 10-year JGB futures rose 0.07 yen to 148.67, but down from the highest since March 20 at 148.87 from early in Monday’s session. However, analysts at Mizuho Securities warn that the length of the review doesn’t mean a normalisation of policy must wait for its conclusion.

“The Bank will still consider normalising policy if stable achievement of the 2% price target is within sight, and we do not believe the review places any constraints on policy changes triggered by a change in the macro environment,” chief bond strategist Noriatsu Tanji and market analyst Yurie Suzuki wrote in a client note.

“By severely undercutting expectations of policy revisions during the review period, the Bank may be trying to prevent the upsurge in policy revision speculation observed ahead of each Board meeting since last year.”

Japanese government bonds squeezed as market waits on Ueda

The 20-year JGB yield rose 2 basis points to 1.01%, recovering from Friday’s one-month low of 0.99%. The 30-year yield rose 3.5 bps to 1.26%, after earlier dipping to a fresh one-month low of 1.22%.

The five-year yield was flat at 0.1%, holding at a one-month trough.

The two-year JGB had yet to trade.