September 30, 2019 / 6:36 AM / 15 days ago

JGBs slip as bets on steepening yield curve firm

TOKYO, Sept 30 (Reuters) - Japanese government bond prices slipped on Monday as investors bet that the Bank of Japan could adjust its policy to steepen the yield curve next month to address the side-effects of negative interest rates.

BOJ Governor Haruhiko Kuroda said last week that if the central bank were to ease monetary policy further, it would aim at pushing down short- and medium-term interest rates without flattening the yield curve too much.

His comments have fanned expectations that the BOJ will cut short-term interest rates while taking some measures to allow longer-dated bond yields to rise at its next policy meeting in late October.

On Monday, the BOJ increased buying in one to three-year JGBs while cutting the size of purchase in three to five-year bonds, further cementing such speculation.

Benchmark 10-year JGB futures fell 0.15 point to 155.02, while the benchmark 10-year cash JGB yield rose 1.5 basis points to minus 0.225%.

The 20-year JGB yield rose 3 basis points to 0.195% while the 30-year JGB yield rose 3.5 basis points to 0.355%, near last week’s eight-week high of 0.365%.

The 40-year JGB yield rose 4.5 basis points to 0.425%, just below near three month high of 0.430% touched last Thursday.

Short-dated yields were in contrast capped by expectations of the BOJ’s further easings, with both the two-year yield and five-year yield flat at minus 0.325% and minus 0.360%, respectively. (Reporting by Tokyo Markets Team; Editing by Aditya Soni)

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