Japan's super-long bond yields slide on optimism over likely cut in MOF sales
TOKYO :Yields on super-long Japanese government bonds (JGBs) fell sharply on Tuesday after Reuters reported the finance ministry may reduce the issuance of those bonds.
The 30-year JGB yield extended the declines, falling 12.5 basis points (bps) to 2.91 per cent, its lowest since May 14.
The 20-year JGB yield fell 13.5 bps to 2.37 per cent.
Japan's Ministry of Finance (MOF) will consider tweaking the composition of its bond programme for the current fiscal year, which could involve trimming the issuance of super-long bonds, two sources told Reuters on Tuesday.
The report came as the market expected the government to step in to curb the sell-off. The yields on long-dated debt rose to record highs amid concerns over a drop in bond buying by the Bank of Japan (BOJ) and political jockeying over stimulus.
"The yields on bonds with super-long maturities extended declines (after the report), but those on shorter-dated bonds rose on concerns that the MOF may increase the sale of those bonds," said Naoya Hasegawa, chief bond strategist at Okasan Securities.
The 10-year JGB yield also extended declines, falling 4.5 bps to 1.46 per cent.
If the MOF were to reduce issuance of 20-, 30- or 40-year Japanese government bonds, it would likely increase issuance of shorter-dated debt instead, the sources said.
The two-year JGB yield was last up 0.5 bp to 0.725 per cent.
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