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Japan’s 10-year JGB yield inches down; caution prevails ahead of BOJ meet

April 18, 2023By Reuters

Japan’s 10-year government bond yield inched lower on Tuesday after hitting over a month-high in the previous session, though caution prevailed ahead of the Bank of Japan’s (BOJ) policy meeting due next week.

The 10-year JGB yield  fell 1 basis point (bp) to 0.470%, slipping from 0.480%, its highest level since March 10.

The 20-year JGB yield fell 1 basis point to 1.080%, while the 30-year JGB yield was flat at 1.335%. The 40-year JGB yield rose 0.5 bp to 1.525%.

“In the run-up to the BOJ meeting, it is hard to take positions,” said a fund manager at a domestic asset management firm.

Many market participants speculate the BOJ will tweak its yield curve control policy or abolish by June the latest, which could help yields to rise.

But investors’ ability to hedge against rising yields is limited because of the BOJ’s huge ownership in some lines of 10-year JGBs. The central bank raised costs for bond lending, which has also made it costly for investor short on JGBs.

The BOJ Governor Kazuo Ueda has consistently stressed the need to maintain the stimulus until a more durable rise in wages and inflation can be foreseen.

The two-year JGB yield was flat at -0.040% and the five-year yield was flat at 0.165%.

Benchmark 10-year JGB futures 2JGBv1 rose 0.09 yen to 147.44, with a trading volume of 13,627 lots.

(Reporting by Junko Fujita; Editing by Nivedita Bhattacharjee)

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