1. JGBs rise as BOJ announces special buying operation

JGBs rise as BOJ announces special buying operation

Japanese government bonds firmed on Thursday, after the Bank of Japan announced its first special fixed-rate buying operation under its revamped monetary policy framework.

By: | Tokyo | Published: November 17, 2016 8:43 AM
Japanese government bonds JGB yields have risen to multi-month highs in recent sessions, tracking upward moves in U.S. Treasury notes, on expectations the administration of President-elect Donald Trump will embark on reflationary policies. (Reuters)

Japanese government bonds firmed on Thursday, after the Bank of Japan announced its first special fixed-rate buying operation under its revamped monetary policy framework.

The benchmark 10-year yield, which rose to a nine-month high of 0.035 percent on Wednesday, was down half a basis point at 0.010 percent.

JGB yields have risen to multi-month highs in recent sessions, tracking upward moves in U.S. Treasury notes, on expectations the administration of President-elect Donald Trump will embark on reflationary policies.

Under its current monetary policy scheme outlined in September to adopt a strategy of JGB yield curve control, the BOJ has said it will guide the benchmark 10-year yield to around zero percent in an effort to stoke stubbornly low inflation and boost growth.

On Thursday, the BOJ offered to buy unlimited amount of JGBs with 1 to 3 years of maturity at an yield of 0.020 percent above the previous close.

It also offered to purchase an unlimited amount of JGBs with 3 to 5 years to maturity at 0.019 percent above the previous close.

The two-year yield shed 3 basis points to minus 0.140 percent and the five-year yield was down 4 basis points at minus 0.100 percent.

The Ministry of Finance is conducting a 20-year auction on Thursday. The central bank typically refrains from conducting buying operations on the same day as JGB auctions.

December 10-year JGB futures were last up 0.28 point at 150.70. They moved off a session low of 150.28, their lowest since January, to surge as high as 150.82 after the BOJ’s announcement.

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