The 10-year JGB yield rose 2 basis points (bps) to 0.430%. Ten-year interest rate swaps were at 0.63%. They have traded in a wide range between 0.3% and 1.1% this year. Meanwhile, an auction of 10-year JGBs was slightly weak. A domestic securities firm noted the bids were within expectations and that the market did not react significantly.
Bank of Japan (BOJ) Governor Kazuo Ueda said on Tuesday the central bank will end its yield curve control (YCC) policy and start shrinking its balance sheet once the prospects of inflation sustainably hitting its 2% target heightens. Under YCC, the BOJ sets a short-term interest rate target of -0.1% and caps the 10-year bond yield around zero as part of its efforts to durably hit the price goal. "With Japan’s core inflation rate looking likely to surprise the BOJ on the upside, we think the central bank will be left with little choice but to further tweak its YCC and allow longer term rates to head higher," said Amir Anvarzadeh, a market strategist at Asymmetric Advisors. The 20-year JGB yield rose 1.5 bps to 1.040%, while the 30-year JGB yield rose 0.5 bp to 1.265%. The two-year JGB yield rose 0.5 bp to -0.035%, while the five-year yield gained 1.5 bps to 0.130%. The 40-year JGB yield rose 0.5 bp to 1.450%. Benchmark 10-year JGB futures fell 0.27 yen to 148.39. (Reporting by Ankur Banerjee; Editing by Dhanya Ann Thoppil)
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