By Masayuki Kitano
TOKYO, Dec 3 (Reuters) - Lead 10-year Japanese government bond futures held steady near a 20-month peak and the two-year yield hovered near a four-year low on Thursday, supported by the Bank of Japan's stepped-up fund injections into the money market.
JGBs jumped this week after the BOJ surprised investors by calling an emergency policy meeting in the face of government pressure to do more to beat deflation, stoking speculation the BOJ may increase its buying of long-term JGBs.
Investors were disappointed when the BOJ stopped short of adopting such a step at Tuesday's meeting, saying instead that it would offer around 10 trillion yen ($114 billion) in three-month funds at 0.1 percent and keep its key interest rate steady at 0.1 percent.
The disappointment faded however, after the central bank stepped up its fund injections into the money market starting on Wednesday through measures such as tripling the size of its fund injections using one-day JGB repos.
'It sharply increased the size of its money market operations and also conducted a same-day operation,' said Akito Fukunaga, a fixed-income strategist for Credit Suisse.
'That caused yields of up to three months in maturity to fall to around 0.1-0.11 percent,' Fukunaga said, adding that the fund injections helped drive home the point that there had been a shift in monetary policy.
December 10-year Japanese government bond futures edged up
0.02 point to 140.23, hovering near a 20
month peak of 140.49 hit earlier this week.
The benchmark 10-year JGB yield dipped 1 basis point to 1.235 percent, inching back in the direction of an
11
month low of 1.190 percent hit on Tuesday.
The two-year JGB yield dipped 0.5 basis point to 0.170 percent, hovering near a four-year low of 0.165 percent struck on Tuesday.
JGBs were mostly firmer even though the Nikkei share average rose 2.3 percent. A rise in equities can bolster risk appetite and erode demand for safe haven government debt.
EYES ON BOJ
Market players have said they were not ruling out the possibility that the BOJ might eventually adopt additional monetary easing steps, such as increasing its outright buying of long-term JGBs.
Such speculation could be rekindled if the yen starts heading higher against the dollar again, after its surge to a 14-year peak against the dollar earlier this month stoked concern about additional deflationary pressure on the economy.
BOJ Governor Masaaki Shirakawa said on Wednesday that Prime Minister Yukio Hatoyama did not make any requests for additional monetary easing by the BOJ when the two met on Wednesday.
The BOJ will hold a policy meeting on Dec. 17-18, a few days after it releases its tankan survey of corporate sentiment.
Even without resorting to additional measures the BOJ could, if it wanted to, conduct further monetary easing just by tweaking its new three-month fund injection scheme, said Jun Fukashiro, chief fund manager at Toyota Asset Management.
The BOJ could expand the size of its planned fund supply to above 10 trillion yen, or extend the maturity of the funds it injects to six months from three months, he said.
Fukashiro, who said the 10-year yield may dip to as low as 1.0 percent by the end of March, said the new scheme could also conceivably be used in conjunction with any yen-selling intervention.
The BOJ slightly scaled back the size of its one-day JGB repo operation on Thursday, offering to supply 2.0 trillion yen in funds, down from 2.5 trillion yen on Wednesday.
But that was still well above the 800 billion yen it had offered in one-day JGB repos before its policy decision on Tuesday. JGB repos involve the lending and borrowing of cash in exchange for JGBs as collateral.
(Reporting by Masayuki Kitano; Editing by Edwina Gibbs) ((masayuki.kitano@thomsonreuters.com; Reuters Messaging: masayuki.kitano.reuters.com@reuters.net; +81-3-6441-1872)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))
($1=87.53 Yen) Keywords: MARKETS JAPAN JGB
Double-click on brackets for following items:
JGB historical auction results
JGB benchmark data from JBTC brokers' broker
JGB composite data from Reuters
JGB long and super-long sectors (OTC)
JGB medium-term sector (OTC)
JGB futures composite
Japanese debt Speed Guide
Yen currency/swaps/derivatives Speed Guide
JGB closing prices/yields from brokers' broker
Lead 10-year JGB futures on TSE
10
year JGB futures on TSE (day session)
10
year JGB futures on TSE (night session)
10
year JGB futures on LIFFE
10
year JGB futures on SIMEX
10
year JGB future options on TSE
Tokyo Mitsubishi Securities yen bond index
TIFFE euroyen futures
SIMEX euroyen futures
CME euroyen futures
Yen OIS from Meitan Tradition
Yen OIS on BOJ meetings from Meitan Tradition
Yen OIS from Totan Capital
Yen TIBOR (Tokyo interbank offered rate)
Yen LIBOR (London interbank offered rate)
Yen interest rate swaps contributed
Yen interest rate swaps from Totan Capital
World yields summary
(Multimedia versions of Reuters Top News are now available for: * 3000 Xtra : visit http://topnews.session.rservices.com * BridgeStation: view story .134 * Reuters Plus: from your WebDSS screen For more information on Top News, visit http://topnews.reuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
TOKYO, Dec 3 (Reuters) - Lead 10-year Japanese government bond futures held steady near a 20-month peak and the two-year yield hovered near a four-year low on Thursday, supported by the Bank of Japan's stepped-up fund injections into the money market.
JGBs jumped this week after the BOJ surprised investors by calling an emergency policy meeting in the face of government pressure to do more to beat deflation, stoking speculation the BOJ may increase its buying of long-term JGBs.
Investors were disappointed when the BOJ stopped short of adopting such a step at Tuesday's meeting, saying instead that it would offer around 10 trillion yen ($114 billion) in three-month funds at 0.1 percent and keep its key interest rate steady at 0.1 percent.
The disappointment faded however, after the central bank stepped up its fund injections into the money market starting on Wednesday through measures such as tripling the size of its fund injections using one-day JGB repos.
'It sharply increased the size of its money market operations and also conducted a same-day operation,' said Akito Fukunaga, a fixed-income strategist for Credit Suisse.
'That caused yields of up to three months in maturity to fall to around 0.1-0.11 percent,' Fukunaga said, adding that the fund injections helped drive home the point that there had been a shift in monetary policy.
December 10-year Japanese government bond futures edged up
0.02 point to 140.23, hovering near a 20
month peak of 140.49 hit earlier this week.
The benchmark 10-year JGB yield dipped 1 basis point to 1.235 percent, inching back in the direction of an
11
month low of 1.190 percent hit on Tuesday.
The two-year JGB yield dipped 0.5 basis point to 0.170 percent, hovering near a four-year low of 0.165 percent struck on Tuesday.
JGBs were mostly firmer even though the Nikkei share average rose 2.3 percent. A rise in equities can bolster risk appetite and erode demand for safe haven government debt.
EYES ON BOJ
Market players have said they were not ruling out the possibility that the BOJ might eventually adopt additional monetary easing steps, such as increasing its outright buying of long-term JGBs.
Such speculation could be rekindled if the yen starts heading higher against the dollar again, after its surge to a 14-year peak against the dollar earlier this month stoked concern about additional deflationary pressure on the economy.
BOJ Governor Masaaki Shirakawa said on Wednesday that Prime Minister Yukio Hatoyama did not make any requests for additional monetary easing by the BOJ when the two met on Wednesday.
The BOJ will hold a policy meeting on Dec. 17-18, a few days after it releases its tankan survey of corporate sentiment.
Even without resorting to additional measures the BOJ could, if it wanted to, conduct further monetary easing just by tweaking its new three-month fund injection scheme, said Jun Fukashiro, chief fund manager at Toyota Asset Management.
The BOJ could expand the size of its planned fund supply to above 10 trillion yen, or extend the maturity of the funds it injects to six months from three months, he said.
Fukashiro, who said the 10-year yield may dip to as low as 1.0 percent by the end of March, said the new scheme could also conceivably be used in conjunction with any yen-selling intervention.
The BOJ slightly scaled back the size of its one-day JGB repo operation on Thursday, offering to supply 2.0 trillion yen in funds, down from 2.5 trillion yen on Wednesday.
But that was still well above the 800 billion yen it had offered in one-day JGB repos before its policy decision on Tuesday. JGB repos involve the lending and borrowing of cash in exchange for JGBs as collateral.
(Reporting by Masayuki Kitano; Editing by Edwina Gibbs) ((masayuki.kitano@thomsonreuters.com; Reuters Messaging: masayuki.kitano.reuters.com@reuters.net; +81-3-6441-1872)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))
($1=87.53 Yen) Keywords: MARKETS JAPAN JGB
Double-click on brackets for following items:
JGB historical auction results
JGB benchmark data from JBTC brokers' broker
JGB composite data from Reuters
JGB long and super-long sectors (OTC)
JGB medium-term sector (OTC)
JGB futures composite
Japanese debt Speed Guide
Yen currency/swaps/derivatives Speed Guide
JGB closing prices/yields from brokers' broker
Lead 10-year JGB futures on TSE
10
year JGB futures on TSE (day session)
10
year JGB futures on TSE (night session)
10
year JGB futures on LIFFE
10
year JGB futures on SIMEX
10
year JGB future options on TSE
Tokyo Mitsubishi Securities yen bond index
TIFFE euroyen futures
SIMEX euroyen futures
CME euroyen futures
Yen OIS from Meitan Tradition
Yen OIS on BOJ meetings from Meitan Tradition
Yen OIS from Totan Capital
Yen TIBOR (Tokyo interbank offered rate)
Yen LIBOR (London interbank offered rate)
Yen interest rate swaps contributed
Yen interest rate swaps from Totan Capital
World yields summary
(Multimedia versions of Reuters Top News are now available for: * 3000 Xtra : visit http://topnews.session.rservices.com * BridgeStation: view story .134 * Reuters Plus: from your WebDSS screen For more information on Top News, visit http://topnews.reuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
© 2009 AFX News
