Halister News

(Bloomberg) -- Bank of Japan offered to buy bonds at fixed yields this week for first time since the method was introduced in September, spurring speculation that a further increase in 10-year yields could trigger another such operation.

• Click here for weekly change in yield curve and here for market snapshot
• Benchmark 10-year yield rose to 0.040% on Friday, highest in nine months; BOJ aims to keep the yield around zero percent
  • A rise in 10-year yield to 0.050% may trigger another fixed-rate operation, according to Mitsubishi UFJ Trust & Banking
• BOJ’s offer to buy current 2-year JGBs at -0.090% and 5-year JGBs at -0.040% on Thursday drew no bids
• Governor Kuroda said Friday that the central bank can buy unlimited amount in fixed-rate operations if needed and will continue to use the method as necessary; also says increase in bond yields at too rapid pace not appropriate
• Finance ministry will auction 40-year bonds on Nov. 25
  • The 20-year bond sale on Thursday marked the lowest bid- to-cover ratio in eight months

• WHAT THEY SAY
• PineBridge Investments Japan (Tadashi Matsukawa, head of fixed-income investment)
  • There’s concern about 40-year bond auction following weak results in 20-year debt sale
  • Close attention is now paid to whether BOJ will conduct fixed-rate operation for the 10-year sector

• Okasan Securities (Makoto Suzuki, senior bond strategist)
  • A fixed-rate operation is likely if yields continue to rise further
  • While demand from life insurance companies and pension funds are expected at 40-year bond offering, outcome could be weak