Japan Bond Gain Pushes Yields to Lowest Since BOJ Began Stimulus

Japan’s government bonds rose, pushing yields to the lowest level since April 2013, the month the Bank of Japan embarked on unprecedented monetary easing.

Benchmark 10-year securities led gains after U.S. Treasuries and German bunds rallied amid speculation stocks around the world had become overvalued. A slump in Japanese shares also drove purchases of JGBs. Japan’s two-year yields slid to a 16-month low after the Bank of Japan bought 510 billion yen ($5 billion) of government debt from the market.

“Demand for bonds dominated on the back of stronger U.S. Treasuries and weak stocks,” said Makoto Yamashita, the chief Japan rates strategist in Tokyo at Deutsche Securities, one of the 23 primary dealers obliged to bid at government debt sales. “Short- and long-term yields have more room to drop.”

Japan’s benchmark 10-year bond yield fell one basis point, or 0.01 percentage point to 0.54 percent, the lowest since April 12, 2013, as of 4:30 p.m. in Tokyo, according to Japan Bond Trading Co. The 0.6 percent security maturing in June 2024 rose 0.095 to 100.566.

The five-year yield declined to 0.145 percent, the least since April 5 last year, while the two-year yield fell as low as 0.055 percent, a level unseen since March 2013.

The BOJ today offered to buy 110 billion yen in debt with one year or less to maturity and 400 billion yen in securities with a five- to 10-year tenor. The central bank announced an unprecedented plan to buy about 7 trillion yen of JGBs a month on April 4, 2013, to push down borrowing costs and help counter deflation.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE