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JGBs edge down slightly, taking cue from firm equities
May 10, 2017 / 5:40 AM / 7 months ago

JGBs edge down slightly, taking cue from firm equities

TOKYO, May 10 (Reuters) - Japanese government bonds edged down on Wednesday, taking their cue from rising Japanese equities but not straying far from their recent ranges.

The benchmark 10-year cash JGB added half a basis point to 0.035 percent, while 10-year JGB futures were down 0.07 point at 150.71 in afternoon trading.

“Investors aren’t expecting the Bank of Japan to alter its policies any time soon, meaning that JGBs will likely keep moving in tight ranges,” said Ayako Sera, senior market economist at Sumitomo Mitsui Trust.

The central bank’s JGB buying amounts in its regular purchase operations on Wednesday were in line with its previous amounts.

BOJ Governor Haruhiko Kuroda said on Wednesday the central bank will consider publicising calculations on how a future withdrawal of massive monetary stimulus could affect its financial health.

The remark was the first time that Kuroda, who until now had shrugged off as premature any debate of an exit strategy for the BOJ’s radical stimulus programme, signalled the chance of offering such information to the public.

Kuroda said in parliament that the BOJ is currently accumulating JGB holdings at the equivalent of an annual pace of about 60 trillion yen ($527.43 billion), below the BOJ’s loose pledge to increase its holdings by 80 trillion yen a year. But he stated that JGB buying fluctuation doesn’t imply future policy moves.

The BOJ chief said he was not currently thinking about any specific ways to change the central bank’s present policy mix, and stressed that yield curve control remained the main focus of monetary policy.

“Overall, Kuroda didn’t seem to say anything that gave investors any reason to change their stance,” Sera said.

Lower U.S. yields curbed JGB moves. The benchmark 10-year U.S. Treasury yield slipped to 2.388 percent in Asian trade, down from Tuesday’s U.S. close of 2.407 percent, after U.S. President Donald Trump abruptly fired FBI Director James Comey in a move that shocked Washington and piqued investors’ aversion to risk.

It had scaled five-week peaks overnight, as interest rate futures priced in close to a 90 percent chance that the U.S. Federal Reserve will raise interest rates again at its next meeting in June.

Japan’s Nikkei stock average was up 0.3 percent in afternoon trade. ($1 = 113.7600 yen) (Reporting by Tokyo markets team; Editing by Jacqueline Wong)

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