JGB yields fall as BOJ's summary offers no clue for policy shift

Government bond yields in Japan saw a decline on Wednesday, lacking indications of a policy shift within the Bank of Japan (BOJ) as per the summary of opinions from this month's meeting.

The 10-year JGB yield dropped by 2.5 basis points (bps) to 0.605 per cent, while the 20-year yield decreased by 2 basis points (bps) to 1.350 per cent.

The summary highlighted a divide among the nine BOJ board members, with some advocating caution in raising interest rates while others emphasised the need for preparations towards a future exit strategy.

Keisuke Tsuruta, senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities, noted the absence of any clear indications regarding the termination of the BOJ's negative rate policy, leading to investor disappointment and subsequent bond purchases.

This month, the BOJ retained its ultra-loose policy stance and refrained from altering its accommodative policy guidance. Governor Kazuo Ueda's post-meeting briefing and Monday's speech provided no insights regarding the timing of any policy adjustments, leaving market players uncertain.

Takeshi Ishida, a strategist at Resona Holdings, anticipates a potential end to the negative rate policy next month, citing Ueda's positive outlook for the Japanese economy. Ueda himself indicated a gradual increase in the likelihood of achieving the BOJ's inflation target.

Meanwhile, the 30-year JGB yield dipped by 1.5 bps to 1.580 per cent, the two-year yield fell by 1 bps to 0.055 per cent, and the five-year yield decreased by 2.5 bps to 0.215 per cent.

(With Reuters inputs)