TOKYO, March 24 Japanese government bond yields
ticked up on Friday, led by short-term bills and bonds, after
the Bank of Japan acted to ease any shortage of short-term JGBs
when the Japanese fiscal year ends on March 31.
The BOJ on Friday sold 1.0 trillion yen of JGBs with a
repurchase agreement, its first reverse repo operation in more
than eight years, which it announced the previous day.
The BOJ on Thursday also pledged to take other steps, such
as making it easier for brokers to use the BOJ's bond lending
facility and skipping its discount bill buying.
These measures, including Friday's operations, were aimed at
temporarily providing brokers with JGBs they need to tide them
over to March 31, the end of fiscal year, when the shortage of
government paper is expected to be the most acute.
Following the operation, JGB repo rates bounced back
sharply, with one-month repo rate rising to minus
0.123 percent from minus 0.280 percent on Thursday.
That had knock-on effects on JGB yields.
The three-month government bill yield rose 3.2 basis points
to minus 0.310 percent while the two-year yield
rose 1.0 basis point to minus 0.265 percent.
The five-year yield rose 2.0 basis points to minus 0.145
percent, giving up their gains during the last two
"People who had been holding long positions based on the
assumption that there would be severe shortage of short-term
paper towards the fiscal year-end were dumping today," said a
trader at a Japanese brokerage.
The market also took a cue from the rise in Japanese share
prices and the dollar/yen, both of which tend to lessen inflows
to low-yielding bonds.
The 10-year JGB yield rose 1.5 basis point to
0.065 percent. The price of the benchmark 10-year JGB futures
dropped 0.09 point to 150.39.
The 20-year yield rose 0.5 basis point to 0.645 percent
while the 30-year rose to 0.835 percent
BOJ Governor Haruhiko Kuroda, speaking at a Reuters
Newsmaker event, said he did not think the BOJ would be forced
to raise its bond yield target just because yields on foreign
bonds were rising.
(Reporting by Hideyuki Sano, additional reporting by senior IFR
analyst Takahiro Okamoto; Editing by Eric Meijer)