Bond futures depreciate slightly and there is a sense of caution about supply and demand early in the year.

12/31/2020 Japan



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The futures market is slightly cheaper on the Dainokai bond market. In addition to refraining from bidding for 10-year bonds and 30-year bonds at the beginning of the year, the Bank of Japan plans to buy monthly and has shown a reduction of more than 1 year and less than 3 years remaining, putting pressure on sales due to a sense of caution about supply and demand. On the other hand, while the dollar / yen exchange rate was rising in the Tokyo currency market, the downside was limited.

  • The closing price of long-term government bond futures for March was 151.92 yen, a decrease of 3 yen from the previous day. Taking control of the strong overnight trading condition, buying preceded and once rose to 151.98 yen. After that, it turned into strong upper price development and temporarily fell to 151.90 yen.
  • The yield on the newly issued 2-year bonds was temporarily minus 0.12%, the highest level since November 4.
  • The yield on the newly issued 5-year bonds was minus 0.11% and the yield on the newly issued 30-year bonds was temporarily 0.65%, the highest levels since the 7th.
  • Yields on newly issued 10-year bonds remain fixed at 0.02%

View of market participants

Eiji Michiya, Chief Bond Strategist at SBI Securities

  • With a small number of participants, the sale is predominant due to the caution against offers from next week.
  • A 40-year bond offering is also planned for January, and the long-term advantage is strong.
  • The fact that the Bank of Japan is planning to buy the country long in January and has indicated a downside direction for the remaining 1-3 years will have some impact, and the downward pressure on interest rates is expected to continue. weaken.

Tadashi Matsukawa, Managing Director, Bond Management Department, Pinebridge Investments

  • The sales are coming up next week and there may be overseas sales.
  • On the other hand, it is difficult to increase personal benefits for additional economic measures in the United States.Due to opposition, the current situation is limited to rising US long-term interest rates.
  • The dollar / yen market has devalued and there are concerns that there may be some tricks in the thin market during the end of the year and the New Years holidays, which could lead to the elimination of bond sales.

background

  • The Ministry of Finance makes a 10-year bond offering on January 6 and a 30-year bond offering on January 8
  • On the 5th, the Bank of Japan purchase operation will be carried out for the remaining 1-3 years, 3-5 years and 5-10 years.plans
  • The dollar / yen exchange rate was 103.26 yen per dollar at a time, and the yen strengthened to the level since the 21st.

Yield on newly issued government bonds (at 3:00 pm)

2 year voucher 5 year voucher 10 year bond 20-year bond 30-year bond 40 year bond
-0.125 ％ -0.110 ％ 0.020 ％ 0.395 ％ 0.640 ％ invalid
The day before yesterday Flat + 0.5 bp Flat -0.5 bp -0.5 bp ー
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