The 10-year JGB yield slipped as low as 0.915% and was last at 0.925%, down 0.5 basis point (bp) from the previous session.
At its policy meeting on Friday, the BOJ said it would start trimming its bond purchases and also announce a detailed plan in July on reducing its nearly $5 trillion balance sheet.
Governor Kazuo Ueda gave few clues on how much the BOJ would trim its bond purchases, saying only that the tapering size will be “significant”.
“If the BOJ announces a significant reduction in its bond buying, that would have a certain impact on government bond yields,” said Naoya Hasegawa, chief bond strategist at Okasan Securities. The market view is that the BOJ will not raise rates and announce details on the bond buying at the same time in July, Hasegawa said, adding that his firm expects the central bank to raise rates in October. The BOJ maintained its short-term policy rate target in a range of 0-0.1% on Friday, as expected. Some market participants had expected it to raise rates again as early as in July. The two-year JGB yield fell 1 bps to 0.285% and the five-year yield slipped 1 bps to 0.505%.
Yields on bonds with longer maturities rose, with the 20-year JGB yield inching up 0.5 bps to 1.740%. The 30-year JGB yield rose 2.5 bps to 2.115% and the 40-year JGB yield was flat at 2.225%.
