year JGB yield falls, longer-term notes keep rising

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TOKYO — The Japanese government bond market moved in mixed directions on Wednesday, following the Bank of Japan’s special buying operation the previous day to tamp down rising yields.

After going untraded for most of the day, the 10-year note fell half a basis point to 0.245%.

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On Tuesday, it reached 0.25% — the highest level the Bank of Japan allows under its yield curve control policy — for the first time since Sept. 16.

The BOJ then stepped in to say it would buy 100 billion yen ($690.99 million) of bonds with 10- to 25-year maturities and 150 billion yen ($1.04 billion) with 5- to 10-year maturities.

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The 5-year JGB fell one basis point to 0.080% after reaching a seven-year high the previous day.

The 2-year note rose half a basis point to hit -0.045%, however, its highest yield since June 30.

Longer-term yields also continued to rise to multi-year highs. The 20-year JGB yield rose 1.5 basis points to 1.045%, the 30-year yield rose 4 basis points to 1.470%, and the 40-year JGB yield rose 6 basis points to 1.695%.

“Some market players expected the BOJ to conduct operations to support long-term bonds as well, which have been soft,” said Keisuke Tsuruta, a bond strategist at Mitsubishi UFJ Morgan Stanley Securities. “But it didn’t happen today, so the yields kept rising.”

Benchmark 10-year JGB futures rose 0.18 point to 147.98. (Reporting by Sam Byford and Tokyo markets team)

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