JGB yields fall as bets of BOJ policy shift fade after quake damage

Credit: REUTERS/Florence Lo

TOKYO, Jan 5 (Reuters) - Japanese government bond yields (JGB) fell on Friday as expectations of an early shift in the Bank of Japan's monetary policy faded after a powerful earthquake on New Year's Day, casting a shadow on the economic outlook.

The 10-year JGB yield JP10YTN=JBTC fell 1.5 basis points (bps) to 0.6%. The 20-year JGB yield JP20YTN=JBTC toppled 2 bps to 1.355% and the 30-year JGB yield JP30YTN=JBTC declined 3 bps to 1.610%.

Monday's magnitude 7.6 earthquake has killed more than 90 people in the country's Hokuriku region, which is home to some tourist sites, and destroyed infrastructure, leaving homes without power.

The yields also fell ahead of the Ministry of Finance's auctions for the 10-year bond auction next Wednesday and another for 30-year notes on Friday.

"Investors want to buy bonds before prices rise, and depending on the outcome, the demand may increase after the auctions," said Keisuke Tsuruta, a senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities.

The positive outcome of a liquidity enhancement auction for bonds with between one- and five-year maturities aided sentiment, pushing the yields lower, Tsuruta said.

The five-year yield JP5YTN=JBTC fell 1.5 bps to 0.195% and the two-year JGB yield JP2YTN=JBTC dipped 1 bp to 0.035%.

(Reporting by Junko Fujita; Editing by Sonia Cheema)

((junko.fujita@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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