Japan’s 10-Year Bonds Advance on BOJ Debt Buying Announcement

Japan’s 10-year bonds advanced, halting a four-day slide, after the nation’s central bank announced today that it would buy debt tomorrow.

Five-year notes were set for the biggest gain since October 2008 after the Bank of Japan said it will offer to purchase a total of 2.51 trillion yen ($25.1 billion) in short- to long-term securities. Thirty-year bonds fell for a fourth day after a measure of demand for the securities at an auction today weakened to the lowest level since at least 2007.

“Bond futures were bought back in anticipation” of the BOJ’s operation tomorrow,’’ said Atsushi Ito, Tokyo-based chief strategist for Japanese government debt at BNP Paribas, one of the 24 primary dealers obliged to bid at auctions.

Benchmark 10-year yields fell four basis points to 0.575 percent as of 4:39 p.m. in Tokyo from yesterday, according to Japan Bond Trading Co., the nation’s largest interdealer debt broker. Yields touched a record low of 0.315 percent on April 5.

Five-year rates dropped 11 basis points to 0.195 percent, while two-year yields fell 1 basis point to 0.12 percent.

Thirty-year yields rose seven basis points to 1.52 percent and 20-year rates climbed 2 1/2 basis points to 1.425 percent.

The BOJ will offer to buy tomorrow 1.3 trillion yen of bonds with tenors longer than five years and purchase 1.21 trillion yen in debt with five years or less to maturity.

Today’s auction of 600 billion yen in 30-year bonds had a so-called tail, or the gap between the lowest and the average price, of 1.16 yen, the most since at least April 2007. The longer the tail, the less bids are around the average price.

Ten-year bond futures climbed 0.57 to 144.73 in Tokyo.

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