TOKYO/SINGAPORE, April 13 (Reuters) - Japanese
government bonds were listless on Thursday, with yields
initially falling in line with U.S. Treasury yields and then
inching higher as investors deliberated the odds of the Bank of
Japan tweaking policy this month.
Benchmark 10-year JGB futures fell as far as 147.55
yen from Wednesday's high of 147.92, before settling at 147.67.
The 10-year JGB yield was flat at 0.460%.
Ten-year interest rate swaps were at 0.67%, in the
middle of a wide range between 0.3% and 1.1% traded this year.
Traders said new Bank of Japan Governor Kazuo Ueda's
comments this week have somewhat put paid to speculation around
a tweak to the BOJ's controversial yield curve control (YCC)
policy when it meets late this month.
Ueda on Wednesday said the central bank must pay more
attention to the risk of failing to meet its 2% inflation target
with premature monetary tightening, rather than being behind the
curve in combating too-high price growth.
Yet policy hawks also pointed to how companies have proposed
wage rises at the annual "shunto" spring wage talks in March.
“I think the BOJ should tweak the YCC at its April meeting,
it is a good timing, especially Japanese companies are raising
wages after their 'shunto' wage talks," said Takayuki Miyajima,
senior economist at Sony Financial Group.
"But it is still uncertain if the inflation remains
sustainably at 2% yet. From what he said at the press
conference, Ueda seems to want that the target to be achieved
before tweaking the YCC."
Traders also pointed to how the BOJ's recent tweaks to open
market operations, namely raising the cost for borrowing bonds
and a lending program to encourage banks to buy more bonds, had
repaired some distortions in the yield curve and bought it some
time.
As investors sold all parts of the curve, barring the
10-year that the BOJ targets, betting on YCC being ended, had
earlier caused a kink in the JGB curve.
In money markets, overnight uncollateralized call money was
traded around -0.010% to -0.002%, higher than normal and
reflective of larger funding needs.
(Reporting by Junko Fujita and Vidya Ranganathan; Editing by
Varun H K)
Messaging: Twitter:@Vid_Ranganathan))
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.