JGB yields fall as BOJ policy shock fades

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TOKYO — Japanese 10-year government bond yields fell from a 7-1/2-year peak on Thursday and super-long yields also slipped from multi-week highs, as investors bought back bonds as the dust settled following the Bank of Japan’s shock policy tweak.

The 10-year JGB yield fell 8 basis points to 0.4%, pulling away from the 0.5% policy ceiling the BOJ unexpectedly set on Tuesday, doubling the previous limit.

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Benchmark 10-year JGB futures rose 0.6 yen to 146.36.

“After the 10-year yield hit 0.48% yesterday and the implied yield in intraday day futures trading also reached 0.496%, very close to the BOJ’s new policy ceiling, the strong selling following the BOJ policy meeting seems to be taking a breather and there is some buying back of bonds,” said Keisuke Tsuruta, a fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities.

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“After this though, we’ll probably see another test of 0.5%.”

The 20-year JGB yield fell 1.5 basis points to 1.2%, after reaching 1.255% on Tuesday for the first time since Oct. 25.

The 30-year yield fell 1 basis point to 1.535%, after touching 1.6% on Wednesday for the first time since Nov. 4.

The five-year yield fell 2 basis points to 0.215%. It surged to a more than nine-year peak of 0.26% on Tuesday.

However, the two-year yield rose 0.5 basis point to -0.01%, after reaching and then dropping back from a more than seven-year high of 0.01% in the previous session. (Reporting by Kevin Buckland; Additional reporting by Tomo Uetake; Editing by Rashmi Aich)