Free Trial

JGBs Extend Rally After BoJ Reaffirms YCC Parameters, 10-Year Yield Returns To Target


JGB futures re-opened sharply higher after the Tokyo lunch break, during which the BoJ demonstrated its steadfast commitment to persistent powerful monetary easing. The contract returned from the trading pause at a new session high of 147.78 before trimming gains.

  • The past week saw a tug-of-war between the BoJ and market participants questioning the sustainability of its firm grip on the yield curve, even as local analysts expected the Bank to stand pat today.
  • JGB futures crept higher in the lead-up to the policy announcement, with the upswing possibly facilitated by comments from FinMin Suzuki, who said he hopes the BoJ will persist in efforts towards achieving its inflation target.
  • The Policy Board indeed maintained its YCC settings, forward guidance and overall assessment of the economy despite recent yen weakness and growing pressure on the 0.25% cap on 10-Year yield.
  • The yield on 10-Year JGBs rose to the highest level since 2016 this morning, with the Bank conducting another round of unlimited fixed-rate debt purchases in the afternoon.
  • But the decision to stick with ultra-loose monetary policy stance dragged benchmark 10-Year yield back into the target range and it last sits at 0.22%.
  • The 7-10-Year sector covered by the Bank's daily bond-purchase operations outperforms on the cash curve, with yields mostly lower as we type, save for the super-long end. JGB futures have stabilised trade at 147.45, 24 ticks above previous settlement.
  • All eyes are on the press conference with BoJ Gov Kuroda this afternoon.

To read the full story



MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.