by Brigid Riley and Kevin Buckland
TOKYO (Reuters) – The Bank of Japan (BoJ) intervened in the Japanese government bond (JGB) market on Friday, as the yield on the Japanese ten-year rose to a decade high in early trading in Asia, driven by the rise in US Treasury bond rates.
The yield on the ten-year JGB thus rose at the start of the session to 0.845%, its highest level since July 2013, after having already increased the day before by 3.5 basis points, to 0.840%, with investors betting on an abandonment of the BoJ’s negative rate policy while the Japanese central bank for its part is trying to curb market expectations by stabilizing the evolution of yields.
The Bank of Japan announced its intention to extend five-year bonds against collateral to financial institutions.
“The BOJ is not trying to cap yields,” said Masayuki Kichikawa, chief macro strategist at Sumitomo Mitsui DS Asset Management. “It sends a signal that movements must be gradual and not rapid,” he added.
The ten-year JGB yield fell to 0.835% after the BoJ announcements. The two-year rate remained stable at 0.075%, while the five-year rate lost 0.5 basis points, to 0.365%.
On long rates, the yield on the 20-year JGB rose two basis points, to 1.635%, its highest level since September 2013.
The rise in JGB yields follows that of their American equivalents, with the 10-year Treasuries rate having crossed the 5.0% mark on Thursday, a first since July 20, 2007.
(Reporting Brigid Riley and Kevin Buckland, Claude Chendjou, edited by Jean-Stéphane Brosse)
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