Yields Fall for Third Day in Japan as BOJ Starts Policy Meeting

Japan’s benchmark government bond yields slid for a third day as the central bank began a two-day policy meeting.

The 10-year yield continued its retreat from a six-month high, helped by demand from a Bank of Japan operation to buy debt with more than five years to maturity. Longer-term yields had risen since late July, when the monetary authority refrained from increasing bond purchases or deepening the negative deposit rate at its last policy gathering. The BOJ also announced a comprehensive review of its stimulus for the current meeting. The yield curve has steepened as investors bet the BOJ would reduce or otherwise limit purchases of the longest tenors.

“The market has already priced in a scaling back of bond purchases ahead of this BOJ meeting,” said Naoya Oshikubo, a rates strategist at Barclays Plc in Tokyo. “Before the decision, it’s likely going to be more and more difficult for the market to have any direction.”

The 10-year yield slipped half a basis point to minus 0.05 percent as of 1:07 p.m. in Tokyo, adding to a two-basis-point decline over the previous two sessions. It rose as high as minus 0.01 percent as recently as Sept. 13. Japanese markets were closed Monday for a public holiday.

The spread between five- and 30-year JGB yields -- a measure of the steepness of the yield curve -- was at 70 1/2 basis points. It widened to around 79 basis points last week, from near 34 basis points in late June, the narrowest in data starting in 2006.

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