Japan Bonds Rise First Time in 6 Sessions on BOJ Policy Decision

Japan’s bonds rose for the first time in six sessions as the central bank decided to buy more government debt to support the economy.

Ten-year yields slid from a one-month high as domestic stocks snapped a three-day gain. The Bank of Japan (8301) said the nation’s economy remained weak and added 10 trillion yen ($119 billion) today to its 66 trillion-yen fund that buys assets, including government bonds. BOJ Policy board member Koji Ishida proposed scrapping interest paid for deposits at the central bank, which was voted down, according to a statement after the central bank concluded a two-day policy meeting.

“Ishida’s proposal for abandoning the deposit rate is a buying catalyst for short-term notes,” said Yasunari Ueno, the chief market economist at Mizuho Securities Co. in Tokyo., one of the 25 primary dealers obliged to bid at government debt sales. “The BOJ decision today was in line with the market’s expectations.”

The benchmark 10-year yield fell 1 basis point to 0.77 percent as of 3:14 p.m. in Tokyo after earlier declining 2 1/2 basis points. The 0.7 percent security maturing in December 2022 added 0.092 yen to 99.350, according to Japan Bond Trading Co., the country’s largest inter-dealer debt broker.

The 10-year rate touched 0.78 percent yesterday, the highest since Nov. 2.

“Japan’s economy has added somewhat weak movement and is expected to remain so for the time being,” the BOJ said in a statement today.

The Nikkei 225 Stock Average (NKY) of domestic shares dropped 1.2 percent. The yen jumped as much as 0.7 percent to 83.86 per dollar.

To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Yumi Ikeda in Tokyo at yikeda4@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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