Bloomberg News

Japan’s Bonds Advance, Pushing Yields Toward Record Low, on BOJ

April 04, 2013

Japan’s government bonds rose, pushing 10-year yields toward a record low set in 2003, after the Bank of Japan (8301) expanded monetary easing at a meeting today.

With BOJ Governor Haruhiko Kuroda presiding over his first meeting since taking the helm last month, the central bank board today streamlined its asset purchase programs, temporarily suspended a cap on some bond holdings and dropped a limit on debt maturities. The BOJ will buy 7 trillion yen ($74 billion) of bonds a month, the central bank said in a statement.

“The decision is an all-in-one package, including all possible options,” said Takehito Yoshino, the chief fund manager at Mizuho Trust & Banking Co. “Funds are likely to flow into longer-dated debt rather than shorter maturities.”

The yield on the benchmark 10-year note dropped as much as seven basis points to 0.48 percent, before trading at 0.49 percent at 2:28 p.m. in Tokyo from 0.55 percent yesterday, according to Japan Bond Trading Co., the nation’s largest interdealer debt broker. The price of the 0.6 percent security maturing in March 2023 advanced 0.572 yen to 101.043. Benchmark yields reached a record low of 0.43 percent in June 2003.

Thirty-year rates slid 14 1/2 basis points to 1.37 percent, the least since 2003. Twenty-year rates fell 13 basis points to 1.265 percent, also the least in a decade.

Ten-year bond futures climbed 0.61 to 146.05, the highest on record. A basis point is 0.01 percentage point.

Five-year rates dropped one basis point to 0.125 percent, while two-year yields were unchanged at 0.06 percent.

To contact the reporter on this story: Yumi Ikeda in Tokyo at yikeda4@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net


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