Japan 10-Year Bond Yield Falls to 2003 Low on Easing Bets

Japanese government bonds rose, sending 10-year and 20-year yields to the lowest levels in almost a decade, after Bank of Japan (8301) Governor Haruhiko Kuroda signaled increased purchases of long-term debt.

The 30-year yield touched a 2 1/2-year low with its spread over 3-year notes narrowing to the least since August 2010. Kuroda told parliament he will consider all possible measures to influence the so-called yield curve, including extending bond maturities in its asset-purchase fund and scrapping a limit on the central bank’s JGB holdings. Leading bond futures climbed to a record.

“The chances that the BOJ will purchase bonds with maturities over 10 years are increasing,” said Atsushi Ito, chief JGB strategist at BNP Paribas SA. “Bonds on the longer end are being bought, flattening the yield curve after Governor Kuroda said he will consider various policy options.”

The yield on the benchmark 10-year note touched 0.525 percent, the lowest since June 2003 when it reached a record 0.43 percent, before closing at 0.54 percent in Tokyo, according to Japan Bond Trading Co., the nation’s largest interdealer debt broker.

Ten-year bond futures for June delivery climbed as much as 0.28 to 145.95, the highest on record. The 20-year rate touched 1.41 percent, the least since July 2003, before finishing at 1.46 percent. Yields on 30-year bonds touched 1.545 percent, a level unseen since August 2010, and closed at 1.575 percent.

Kuroda said in parliament today he envisages 2 years for achieving the BOJ’s 2 percent annual inflation target. The central bank, which next meets on April 3-4, currently buys government notes with maturities of up to three years through its 76 trillion-yen ($806 billion) program.

Consumer prices excluding fresh food probably declined 0.4 percent in February from a year earlier, according to the median estimate of economists surveyed by Bloomberg News. The statistics bureau releases data on March 29.

To contact the reporters on this story: Yumi Ikeda in Tokyo at yikeda4@bloomberg.net; Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net

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

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