U.S., Japanese Bonds Trim Loss as BOJ Seen ‘Not Hawkish at All’

  • BOJ introduced efforts to control yield curve in Japan
  • Slump in Japanese bonds in past month had roiled global peers

Treasuries and Japanese bonds trimmed losses triggered by the Bank of Japan’s decision to target 10-year yields in the nation at zero.

Government securities initially fell on the statement, with the BOJ indicating it wouldn’t allow 10-year yields to return to the record low of minus 0.3 percent seen as recently as July. Bonds then recouped losses on speculation the policy will also prevent yields from rising.

“The BOJ’s stance is not hawkish at all,” said Kei Katayama, a bond manager in Tokyo at Daiwa SB Investments, which has about $52.7 billion in assets. The new policy will provide both a cap and a floor for bonds, he said.

U.S. 10-year yields rose two basis points to 1.71 percent as of 7:31 a.m. in London, according to data compiled by Bloomberg. They were as high as 1.73 percent.

Japan’s benchmark yield advanced 3 1/2 basis points to minus 0.03 percent. It was briefly above zero for the first time since March.