JGB yields slump at close post Fed rate cut, BoJ’s unchanged policy decision

The Japanese government bond yields slumped at close Thursday after the Federal Reserve adopted a 25bp interest rate cut at its policy meeting in the overnight session, as was widely anticipated by market participants.

However, the Bank of Japan’s (BoJ) monetary policy meeting, concluded early today, delivered no change, failing to creating any major impact on domestic bond market.

At close, the yield on the benchmark 10-year JGB note, which moves inversely to its price, plunged 13 basis points to -0.138 percent, the yield on the long-term 30-year slipped nearly 1-1/2 basis points to 0.399 percent and the yield on short-term 2-year slumped 18 basis points to -0.234 percent.

The US Federal Reserve’s Open Market Committee delivered the third rate cut for the year, taking the Fed Funds rate upper bound to 1.75 percent, and signalled that a prolonged pause is likely, DBS Economics & Strategy reported.

The BoJ left interest rates unchanged today as most had anticipated and set a rather high bar for any easing. The Bank’s decision to leave its short-term policy rate unchanged at -0.1 percent was correctly anticipated by 33 out of 46 economists polled by Bloomberg, Capital Economics reported.

The Bank altered its forward guidance by noting that it “expects short-term and long-term interest rates to remain at their present level or lower for as long as it is necessary to pay close attention to the possibility that the momentum toward achieving the price stability target will be lost, the reported.

Meanwhile, the Nikkei 225 index closed -0.37 percent lower at 22,927.12 by 06:50GMT.