Spread at Nine-Month Low Signals More BOJ Easing: Japan Credit
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Japan’s two-year bonds yielded the least relative to overnight lending rates between banks in nine months on speculation the Bank of Japan will add to monetary easing to counter the yen’s advance against the dollar.
The spread fell to 4.9 basis points yesterday, the least since Nov. 4. The two-year overnight-index swap rate, an indication of what traders expect the Bank of Japan’s key interest rate will average during the period, sank to 0.05 percent, the least since Oct. 5. The comparable U.S. rate slid to 0.07 percent on Aug. 11, a level not seen since Dec. 2001.