Halister News

(Bloomberg) -- Japanese government bond yields rise across the board, taking their cue from higher yields in global rates markets and spill-over effect from the Bank of Japan operations Wednesday, says Naoya Oshikubo, a rates strategist at Barclays.

• BOJ skipped outright buying of JGBs in 1-to-5 year maturities Wednesday, raising the prospect that frequency of purchases for that sector will be cut to 5 from 6 previously: click here for story
  • 10-year JGB yield up 1bp to 0.085%, highest since Dec. 16 when it hit 0.1%, the level BOJ targets in its yield curve control policy; 40-year yield rose to as high as 0.995% Wednesday, highest since last February
  • 30-year rises to 0.83% to match yesterday’s high, which is the most since March and 20-year yield is at 0.65%
• “BOJ is likely to conduct buying of 1-to-5-year sector tomorrow as yesterday’s move was probably aimed at stemming the sharp decline in that zone on extremely tight supply and demand balance,” Oshikubo says
• Focus for Friday’s operation is on whether BOJ would conduct buying for maturities ~10 years, as it has already conducted 5 such operations this month as planned
  • If the BOJ skips outright buying operation for that sector, it won’t come as a surprise; but as there is speculation for such an operation, yields could climb before the operation is announced as markets will test BOJ’s resolve
  • There was also speculation Wednesday the BOJ might boost amount of bonds it buys for super-long zones as yields were climbing; but the central bank bought just the regular amount, it could suggest BOJ is tolerating a rise in super-long yields