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JGBs slip as BOJ trims purchases of shorter maturities
March 1, 2017 / 6:53 AM / 9 months ago

JGBs slip as BOJ trims purchases of shorter maturities

TOKYO, March 1 (Reuters) - Japanese government bonds fell on Wednesday, with the yield curve steepening as superlong maturities sold off a day after the Bank of Japan tweaked its planned JGB buying operations.

The benchmark 10-year JGB yield rose 1 basis point (bp) to 0.060 percent, while 10-year JGB futures ended down 0.11 point at 150.47.

The BOJ trimmed its purchases of shorter maturities in its JGB buying operations on Wednesday, a day after announcing changes aimed at making its operations more transparent.

The central bank offered to buy 400 billion yen of JGBs maturing in three to five years, compared with 420 billion yen previously. It offered to buy 320 billion yen of JGBs maturing in one to three years, compared with 400 billion previously.

“They reduced the purchase amount at the short end of the curve, which was pretty much expected,” said Tadashi Matsukawa, head of fixed income investment in Tokyo at PineBridge Investments.

“The market reaction seems to be that some believe the BOJ will be curtailing the 25-year and over purchases,” he said. “Personally, I think it’s a little bit premature for them to do that.”

The 20-year yield rose 2.5 bps to 0.650 percent, while the 30-year JGB yield added 4 bps to 0.840 percent.

On Tuesday, the central bank announced the dates of its bond-buying operation for March, a move aimed at smoothing market operations by curbing excessive market volatility. The plan indicated the BOJ is likely to maintain the pace of purchases in most maturities while trimming slightly its buying of short-term bonds.

The central bank should not rule out the possibility of raising its bond yield targets before its price goal of 2 percent is achieved, BOJ board member Takehiro Sato said on Wednesday. (Reporting by Tokyo markets team; Editing by Gopakumar Warrier)

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