Treasuries Fluctuate After Rising at Seven Straight BOJ Meetings

  • BOJ meetings reminder of slower world inflation: Capital Asset
  • Treasuries are little changed for July as record rally eases

Treasuries fluctuated as the Bank of Japan finished a two-day meeting Friday after gaining on each of the seven previous days the BOJ announced policy decisions.

Japan’s central bank is overshadowing the Federal Reserve this week because BOJ policies that have sent the Asian nation’s yields below zero are driving a rush for bond markets including the U.S. and Australia. Japanese policy makers said Friday they plan to increase stock purchases via exchange-traded funds.

While the BOJ hasn’t eased policy at every one of its past seven meetings, going back to Oct. 30, its announcements are a reminder of the difficulties central banks are having in spurring inflation.

“It’s contagious,” said Toshifumi Sugimoto, chief investment officer in Tokyo at Capital Asset Management, who has 30 years of experience in fixed income. “Disinflation pressures in Japan continue. Globally we’ll see lower inflation.”

The benchmark U.S. 10-year note yield climbed one basis point to 1.51 percent as of 1:18 p.m. in Tokyo, according to Bloomberg Bond Trader data. The price of the 1.625 percent security due in May 2026 fell 2/32, or 63 cents per $1,000 face amount, to 101 1/32.

Australia, Japan

Australia’s 10-year yield slid to a record 1.83 percent. Japan’s climbed 7.5 basis points to minus 0.2 percent.

Japan consumer prices excluding fresh food, the BOJ’s benchmark inflation gauge, fell 0.5 percent in June from a year earlier, government data Friday showed. A U.S. price benchmark the Fed uses to guide policy rose 0.9 percent in May. Central banks in both nations have an inflation goal of 2 percent.

Japan’s purchases of overseas bonds surged to a record this month, helping push benchmark 10-year U.S. yields to an all-time low of 1.32 percent July 6.

Treasuries have since pared their monthly gain, leaving the Bloomberg U.S. Treasury Bond Index little changed in July. The Fed said this week near-term risks have diminished, suggesting policy makers will raise interest rates this year or next.

“I’m cautious on Treasuries and other bond-market yields,” said Park Sungjin, the head of principal investment in Seoul at Mirae Asset Securities Co., which oversees $8 billion. “The U.S. economy is not bad. The Fed will do something this year.” Benchmark yields will rise to 1.90 percent by Dec. 31, he said.

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