Japan's Bonds Extend Advance After BOJ Keeps Policy Unchanged

BOJ Surprise: Kuroda's Act of Market Defiance?

Japan’s government bonds extended gains after the nation’s central bank decided to keep monetary policy unchanged.

Benchmark 10-year yields dropped to minus 0.095 percent after Bank of Japan Governor Haruhiko Kuroda and his colleagues kept the pace of expanding the monetary base at 80 trillion yen ($733 billion) per year. The BOJ held its key rate at minus 0.1 percent at the conclusion of its two-day policy meeting Thursday.

“It’s positive for markets in that the BOJ didn’t opt for boosting volume needlessly,” said Mari Iwashita, chief market economist at SMBC Friend Securities Co. in Tokyo. “It’s likely that rather than hastening to act now, the BOJ bought time to mull over what it can do when it is faced with the need to act.”

Yields on the 0.1 percent government bonds maturing in March 2026 fell 3 1/2 basis points as of 12:43 p.m. in Tokyo, according to Japan Bond Trading Co. The price rose 0.353 yen to 101.943. Benchmark yields touched a record low of minus 0.135 percent on March 18. A basis point is 0.01 percentage point.

Twenty-three of 41 analysts surveyed by Bloomberg expected policy makers would expand stimulus. Nineteen analysts predicted the BOJ would increase purchases of exchange-traded funds, eight anticipated a boost in bond buying and eight projected the BOJ would lower its negative rate, according to the survey conducted April 15-21.

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