10-year JGB closes in on negative territory

While bank of Japan's (BOJ) negative rate charm is fading over benchmark stock index Nikkei, which is marginally down -0.5% today and Yen is flat for the day, Japanese government bonds are continuing their advance.

Since Bank of Japan (BOJ) announced negative rates and indicated that it might go further down the line, Yield curve has been sliding into the negative territory, By Friday, Japanese government yield were negative up to seven years. Today they are negative up to eight. 10 year is just shy of negative zone, trading at 0.05%. 10 year yield traded as low as 0.024% on the day.

Only Switzerland is the only country, where 10 year yield is negative.

Even if stock rally sours, Yen is likely to remain under downside pressure.

Bank of Japan (BOJ) will now be purchasing bonds under its current qualitative and quantitative easing in negative yields. Since Bank of Japan (BOJ) decided to increase duration of its portfolio from 7-10 years to 7-12 years, it is likely that yields would drop below negative beyond 10 years.

Impact on the JGB market might intensify, if European Central Bank (ECB), do announce further easing in March.