JGBs soar, futures rise to record after BOJ unveils easing

TOKYO, April 4 Thu Apr 4, 2013 1:58am EDT

Related Topics

TOKYO, April 4 (Reuters) - Japanese government bond futures soared to a record high on Thursday and the benchmark JGB yield skidded to its lowest in nearly a decade, after the Bank of Japan dramatically eased monetary policy.

The central bank said it will bring forward the timing of open-ended asset buying and extend the duration of government bonds it buys in its easing program.

Ten-year JGB futures rose as high as 146.05, a record peak, and were last up 0.51 point at 145.94.

The 10-year yield dropped 8 basis points to 0.470 percent, its lowest since June 2003 and marking their biggest one-day fall since December 2010.

Longer maturities also soared, after the BOJ said it will double its holdings of long-term government bonds and exchange-traded funds while buying government bonds with all maturities, including 40-year bonds.

"We are still trying to scrutinize how the purchase will be done, but I think the average of seven years to maturity, depending on the market outstanding, will be centered on the 10-year sector, but with decent size purchases in the superlong tenor as well," said Maki Shimizu, senior strategist at Citigroup in Tokyo.

"That is why the market is rallying like this," she added.

The 20-year yield plunged 14.5 basis points 1.245 percent, while the 30-year yield shed 15 basis points to 1.370 percent, also their lowest respective levels in nearly a decade.

BOJ Governor Haruhiko Kuroda will hold a news conference after his debut policy-setting meeting, with his embargoed comments to come out any time after 4:15 p.m. (0715 GMT).

FILED UNDER: