Japanese bonds slip on extra stimulus package

The Japanese government bonds dipped on Thursday in the wake of speculation about further stimulus package from the government. Also, rebound in prices of riskier assets including crude oil and equities drove-out investors from safe-haven buying.

The yield on the benchmark 10-year bonds, which moves inversely to its price, rose ½ basis points to -0.240 percent, the yield on long-term 30-year note rose 5-1/2 basis points to 0.269 percent, the yield on 20-year note jumped 3 basis points to 0.832 percent and the short-term 2-year JGB yield remained steady at -0.325 percent by 06:50 GMT.

Moreover, speculations have cropped up in the market governing news that the Japanese government is considering twenty trillion yen (around 187 billion US dollar) worth of stimulus measures, with some suggestions that it could be even larger.

The Japanese Prime Minister Shinzō Abe also confirmed after the election result that he will instruct economy minister Nobuteru Ishihara to compile economy stimulus package and ask to implement economic measures to support domestic demand.

In addition, the JGBs have been closely following developments in oil markets because of their impact on inflation expectations, which are well below the Bank of Japan's target. Today, crude oil prices rose after the US Energy Department reported a ninth consecutive weekly drawdown of crude stocks. The International benchmark Brent futures rose 0.36 percent to $47.33 and West Texas Intermediate (WTI) climbed 0.35 percent to $45.91 by 07:00 GMT.

According to Reuters, the central bank offered to buy a total of 1.135 trillion yen in JGBs under its asset purchase programme, including 375 billion yen in the 1- to 3-year zone, 440 billion yen in the 3 to 5 year zone, 200 billion yen in the 10 to 25 year zone, and 120 billion yen of JGBs maturing in over 25 years.

Meanwhile, the benchmark Nikkei 225 index closed up +0.77 percent at 16,810.22, and the broader Topix index closed 0.65 percent higher at 1,339.39 points.