Finance1 min read

Global Market: Japan bond yields steady ahead of BOJ policy decision

By · Published by Everything Blog

In short

The Bank of Japan is widely anticipated to maintain current interest rates at its upcoming Friday meeting, though a Reuters poll suggests a 25-basis-point hike may arrive in December. In the meantime, Japanese government debt found footing following a Federal Reserve decision that signaled little appetite for a December U.S. rate increase. A solid domestic two-year auction helped anchor shorter-dated paper, keeping overall yield movements relatively subdued across the curve.

Key points

  • A Reuters survey of economists indicates that the Bank of Japan could deliver a 25-basis-…: A Reuters survey of economists indicates that the Bank of Japan could deliver a 25-basis-point rate hike in December.
  • Strong domestic auction demand helped anchor shorter-term Japanese government bond yields…: Strong domestic auction demand helped anchor shorter-term Japanese government bond yields during the trading session.
  • Supportive spillover from the U.S. Treasury market followed a Federal Reserve decision sh…: Supportive spillover from the U.S. Treasury market followed a Federal Reserve decision showing few signs of a December hike.

Sources checked by our analysis pipeline: 1

Investors remained cautious ahead of the Bank of Japan's monetary policy decision on Friday, with markets widely expecting the central bank to maintain its current interest rates.

Read more: Global Market: China’s yuan hits four-year high against dollar after Fed holds rates

According to Reuters, the US Treasury market strengthened after the Federal Reserve's latest decision offered few indications that it would raise interest rates at its next meeting in December. The move provided support to Japanese government bonds by easing concerns about a more aggressive tightening of monetary policy.

The benchmark two-year Japanese government bond yield fell 0.5 basis point to 1.895%, reversing an earlier modest increase following the auction results. Bond yields move inversely to prices.

Demand at the two-year bond auction strengthened, with the bid-to-cover ratio rising to 4.03 from 3.89 at the previous month's sale, indicating improved investor appetite for Japanese government debt.

Other maturities were mixed. The 10-year JGB yield edged up 0.5 basis point to 2.83%, while the five-year yield remained unchanged at 2.265%. The 30-year yield rose 0.5 basis point to 3.88%. The…

Finance