Halister News

(Bloomberg) -- Japanese govt bond yield curve shifts higher as yen extends decline against the dollar to weakest level since March while Nikkei stock index closes at highest in more than 10 months.

• Click here for weekly change in yield curve and here for market snapshot
• CPI excluding fresh food fell 0.4% y/y in October, marking an eighth straight month of declines
• Bank of Japan Governor Kuroda said Nov. 22 that new interest rate policy is more sustainable and flexible; also said that with the new policy, the central bank can control long-term interest rates
• Foreign investors sold net 1.11t yen ($9.8b) of Japanese bonds in week ended Nov. 18, most since Sept. 23: MOF data
  • Bought net 1.42t yen of money-market securities last week, most in two months
• Nation to sell 2-year notes on Nov. 29 and 10-year bonds on Dec. 1

• WHAT THEY SAY
• Deutsche Securities (Makoto Yamashita, chief Japan interest- rate strategist)
  • Investors who follow indexes may have to buy longer- maturity debt as their benchmarks’ durations become longer at month-end; this exerts some flattening pressure on the yield curve and along with BOJ’s purchases, it will support bonds
  • If current 10-year note trades around 4bps before auction on Dec. 1, yields at the sale could fetch 4.5-5.0bps, which should attract some demand
  • Market participants see a possible fixed-rate bond purchase from BOJ if 10-year yields rise above 5bps

• Okasan Securities (Makoto Suzuki, senior bond strategist)
  • JGBs will probably remain under slight downward pressure next week
  • BOJ is unlikely to reduce bond buying this year as that may pressure the central bank to conduct fixed-rate operation
  • Expects 10-year yield to fluctuate between zero percent and 0.07% next week