Japan’s 10-year bond yields rise after BOJ Governor Kuroda comments

SINGAPORE, Dec 26 (Reuters) – Japanese 10-year government bond yields rose on Monday after Bank of Japan Governor Haruhiko Kuroda reiterated that the decision to widen the allowance band around its yield target was “absolutely not a first step” towards an exit from ultra-loose monetary policy.

The 10-year JGB yield rose 5.5 basis points (bps) to 0.430%, having slipped to as low as 0.345% earlier in the day.

Last week, the BOJ in a surprise move decided to allow the 10-year bond yield to move up and down 50 bps around the 0% target, wider than the previous 25-bps band, while keeping its yield curve control targets unchanged.

The move stoked expectations the lone dovish central bank is set to adjust its monetary policy but Governor Kuroda has repeatedly said it was not changing its policy.

“Under our yield curve control policy, we will maintain monetary policy accommodative to sustainably and stably achieve our price target accompanied by wage increases,” Kuroda said in a speech delivered at a meeting of Japan’s business lobby Keidanren on Monday.

Benchmark 10-year JGB futures fell 9 yen to 146.

The 30-year JGB yield fell 2 bps to 1.485%, while the five-year yield fell 0.5 bps to 0.195%.

The 40-year JGB yield fell 3 bps to 1.685%, while the 20-year JGB yield fell 1 bps to 1.205%.

The BOJ offered to buy 675 billion yen (USD 5.10 billion) of bonds with maturities of more than 5 years and up to 10 years, in the middle of the range the central bank planned to purchase for January to March.

The central bank offered to buy 575 billion yen of bonds with maturities of more than 3 years and up to 5 years and 200 billion yen of JGBs with maturity of more than 25 years. The offers were also in the middle of the range of its planned purchase.

(USD 1 = 132.4600 yen)

(Reporting by Ankur Banerjee in Singapore and Tokyo Markets team; Editing by Krishna Chandra Eluri)