SINGAPORE: Longer-term Japanese government bonds edged higher on Tuesday, dragging their yields lower as the Bank of Japan continued bond buying and traders awaited this week’s policy review.

JGBs were also calmer this week as the yen held steady and US Treasury yields fell. Benchmark 10-year JGB futures rose 0.08 points to 149.35.

The 10-year JGB yield remained stable at 0.245%. “While yen-denominated bonds have been repurchased due to lower US interest rates, there is no sense of direction in the market as investors await the Bank of Japan policy meeting on 27 and 28,” said a servant. said stockbroker.

The BOJ would also be reluctant to increase its bond buying operations so close to a policy review, the broker said.

Japanese government bond yields rise on weak auctions

Speculation is rife that the BOJ could allow long-term rates to rise further or adjust its policy guidance to defend the yen’s decline as some lawmakers fear further currency declines will do more. harm than good to the economy by inflating import costs.

But with modest inflation relative to other countries and the economy still operating below pre-pandemic levels, the BOJ is in no rush to raise borrowing costs or alter a pledge to maintain rates at or below current levels, said sources familiar with his thinking.

The 20-year JGB yield fell 2 basis points to 0.750%. The two-year JGB yield fell 0.5 basis points to minus 0.060%. Tuesday was also the last day of four-day fixed-rate bond purchases that the BOJ began last week, as part of efforts to defend its yield curve control policy.

This offer followed the yen’s decline to its lowest level in two decades, leading markets to test the BOJ’s policy range for 10-year JGBs at 0.25%. The dollar has gained 11% against the yen since the start of the year.

Last week’s 129.43 was the highest for the dollar-yen in 20 years.

Japanese Finance Minister Shunichi Suzuki, meanwhile, dismissed media reports that he had discussed with US Treasury Secretary Janet Yellen a joint currency intervention to stem yen weakness at their meeting last week. last week.