Japanese long –term debt slipped on Monday in negative territory as investors bought the debt for reselling purposes after the Bank of Japan announced its massive bond-buying operation. Moreover, further easing pressure from
Apart from this, the BoJ bought fewer than expected longer bonds in its purchase operations. The central bank reduced its purchase amounts in JGBs maturing in 10 to 25 years, and in 25 to 40 years, by 200 billion yen ($1.77 billion) in each zone. The benchmark 10 year yields were trading lower -5.56% at 6:00 AM London time.
“Expect an expansion of stimulus, and if the market happens to rule out any additional boost in stimulus, that would create an opportunity to go long,” said Takeki Fukushima, a rates strategist at Citigroup Global Markets Japan Inc. in Tokyo, who predicts the 10-year note will yield about minus 0.15% at year-end.
In addition, we foresee that if GDP growth and inflation fail to improve over the coming months, another cut will probably occur sooner rather than later. We also believe that in the April meeting of the Monetary Policy Board pressure will mount on the BoJ to take action as political pressure, for additional monetary stimulus may intensify ahead of nationwide elections in July, making JGB less attractive asset for investment.
