Japanese Bonds Rally as BOJ Stimulus Surprise Enables GPIF Exit

Japanese government bonds gained as the central bank’s unexpected decision to boost asset purchases reassured investors that the world’s biggest pension fund can cut holdings of domestic debt without disrupting markets.

The rally pushed Japan’s 10-, 20- and 30-year yields to 18-month lows. The Bank of Japan said it will boost debt buying to 80 trillion yen ($720 billion) a year, a 30 trillion yen increase. Bond futures climbed to a record after the central bank said it will extend the average maturity of bond purchases to as much as 10 years. The moves outweighed the decision by the $1.1 trillion Government Pension Investment Fund to cut domestic bonds to 35 percent of holdings from 60 percent.