Bank of Japan | Image:Shutterstock
Japanese government bonds: Japanese government bonds (JGBs) remained within a narrow range on Friday, bolstered by ongoing bond purchases by the Bank of Japan (BOJ) despite indications of eventual tapering.
The benchmark 10-year JGB futures experienced a slight decline of 0.07 yen to 145.34.
Meanwhile, short-term rates saw the overnight call money rate quoted at 0.074 per cent, marking a positive shift for the first time in eight years as of Thursday.
Following the BOJ’s landmark decision to end its negative rate policy earlier in the week, money market yields have risen, marking a major shift in monetary policy.
Simultaneously, the US Federal Reserve maintained its stance on inflation and projected three interest rate cuts by year-end. This led to a rally in the dollar and pushed the yen to a four-month low.
Despite these developments, JGB movements remained restricted.
A strategist at a domestic asset manager noted that the market had already absorbed the key cues from both the BOJ and the Fed’s policy meetings.
Earlier in the day, the BOJ continued its bond purchases, particularly targeting medium-to-long-term and super-long-term zones as part of its money market operations.
BOJ Governor Kazuo Ueda stated that while the central bank plans to scale back its government bond purchases eventually, it will refrain from doing so for the time being.
The BOJ recently concluded its negative rates, setting the overnight call rate within a range of 0-0.1 per cent. However, it reiterated its commitment to maintaining the pace of bond purchases at approximately 6 trillion yen ($39.6 billion) per month.
The 10-year JGB yield saw a marginal increase of 0.5 basis points to 0.745 per cent. Meanwhile, ten-year interest rate swaps were at 0.89 per cent, and the one-month TONAR overnight-indexed swap remained steady at 0.0601 per cent.
(With Reuters Inputs)
