* 10-yr yield falls to record low of 0.425 pct
* 10-yr futures jump to intraday record high
* Superlong tenor also jumps, yields at near-decade lows
TOKYO, April 4 Japanese government bond futures
soared to a record high on Thursday and the benchmark yield
plunged to a record low, after the Bank of Japan shocked markets
by dramatically easing and radically overhauling its monetary
Superlong JGB yields also skidded to their lowest levels in
nearly a decade after the central bank said it will adopt a new
balance sheet target and pledged to double its JGB holdings in
two years in a bid to arrest deflation.
The 10-year yield dropped 12.5 basis points
to a record low of 0.425 percent, marking its biggest one-day
fall since November 2003. It was last down 12 basis points at
"The market was caught off guard," said Tadashi Matsukawa,
head of fixed-income at Pinebridge Investments in Tokyo, who
said many investors had held off buying early in the session on
expectations that they would be able to buy on dips after the
decision was announced.
"Today was like panic buying, and dealers had to cover at
very expensive levels," he said.
Ten-year JGB futures ended one tick shy of their
intraday all-time record peak, gaining 0.60 point to 146.04.
Longer maturities also skyrocketed after the BOJ said it
will combine two bond-buying schemes, its asset-buying and
lending programme and the "rinban" bond-buying market operation,
to buy JGBs with all maturities across the yield curve.
"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 tumbled 27 basis points to
1.120 percent, while the 30-year yield shed 30
basis points to 1.220 percent, also their lowest respective
levels in about a decade.
The 40-year JGB, an illiquid instrument, was said to be
untraded and its yield indicated down 30.5 basis points at 1.280
The BOJ said it will go back to open-ended asset purchases,
and buy over 7 trillion yen ($75 billion) of long-term JGBs each
month, so that the balance of its bond holdings will increase at
an annual pace of 50 trillion yen.
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).
The policy meeting was the first chaired by Kuroda since he
assumed the BOJ's helm last month with a vow to whip deflation,
and the decisions were made by unanimous vote.