Free Trial

MNI INSIGHT: Current 10Y JGB Yield Within BOJ Acceptable Range

MNI (London)
--BOJ Ready With Flexible Bond Buying Ops To Curb Rapid 10-Year Yield Rise
     TOKYO (MNI) - The higher Japanese government bond yields seen on the back
of rising U.S. Treasury bond yields are still within the Bank of Japan's
acceptable range and the BOJ's primary focus remains how -- and how rapidly --
the 10-year bond yield moves toward +0.2% or higher, MNI understands.
     The 10-year JGB yield rose to 0.155% in early afternoon trade on Thursday,
up two basis points from Wednesday's close to the highest level since January
     BOJ officials in charge of daily operations are required to trade the
10-year bond yield "around zero percent" with a range of -0.2% to +0.2% that the
BOJ board has decided and the central bank stands ready to curb higher yields
through its outright bond buying operations 'flexibly and appropriately', if the
rise in 10-year bond yield is deemed too rapid.
     Compared with the recent rapid rise in the U.S. 10-year Treasury yield, the
pace of JGB yield gains hasn't been so fast as to unnerve the views of officials
in charge of operations who still have a wait-and-see outlook.
     The 10-year bond yield at 0.155% is still within the BOJ's tolerated -0.2%
to +0.2% range and BOJ officials are focused on how and at what speed the
10-year bond yield moves toward +0.2% or higher.
     BOJ officials hope JGB yields move 'flexibly' taking note of both economic
and price condition developments, as well as reflecting overseas bond markets.
     At the July policy meeting, the BOJ board voted 7-2 to add flexibility its
long-term interest rate target and asset purchases, allowing the nearly flat
Japanese government bond yield to steepen slightly in line with firmer growth
and inflation.
     The bank "strengthened" its framework, allowing a wider trading range of
+0.2% to -0.2% for the 10-year JGB yield, double the previous, unofficial range
of +0.1% to -0.1%.
     The 20-year JGB yield rose to 0.695% Thursday, hitting the highest level
since March, while the 30-year bond yield rose to 0.953% to the highest level
since February 2016. The 40-year bond yield rose to 1.115%, also the highest
level since February 2016.
--MNI Tokyo Bureau; tel: +81 90-2175-0040; email:
--MNI London Bureau; tel: +44 203-586-2225; email:
[TOPICS: MMJBJ$,M$A$$$,M$J$$$,MT$$$$,MX$$$$,M$$FI$,MN$FI$]
MNI London Bureau | +44 203-865-3812 |

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.