JGBs climb after BoJ surprises with bond-buying plans, policy meeting in focus next week

The Japanese government bonds climbed steadily Friday after the Bank of Japan (BoJ) surprised markets, by unveiling its bond-buying plans, wherein it raised the purchase operation of long-term bonds.

However, investors seem to have shrugged off the better-than-expected consumer price inflation data, released early today. Markets now wait to watch the decision of the BoJ at its 2-day monetary policy meeting, scheduled to be held on January 30-31.

The benchmark 10-year bond yield, which moves inversely to its price, hovered around 0.08 percent, while the long-term 30-year bond yields fell 1/2 basis point to 0.85 percent and the yield on the short-term 3-year note also dipped 1/2 basis point to -0.14 percent by 06:20 GMT.

The central, in its latest JGB buying operation plans, has raised the purchase of long-term 5-10 years maturity bonds to JPY450 billion, from JPY410 billion, while keeping other short-to-medium-term maturity bonds unchanged for purchases.

Lastly, we foresee that the central bank will remain committed to hold its 10-year JGB yields near zero, while keeping interest rate steady at -0.10 percent.

Meanwhile, Japan’s Nikkei 225 closed 0.30 percent higher at 19,461 while at 6:00GMT, the FxWirePro's Hourly Yen Strength Index remained highly bearish at -147.20 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex