BOJ Having Large Impact on Government Bonds

The Bank of Japan’s (BOJ) massive asset purchase program has put government bond yields on a relentless slide into negative territory, and while some analysts insist a U.S. rate hike will reverse the trend later this year, others expect a slide into unchartered territory.

“Yields have fallen so low that analysts no longer have any historical risk models to fall back on,” said Shinichi Tamura, Barclays’ Japan bank analyst, noting that rates strategists are going on blind faith that yields will stop falling.

Japan’s short-term yields, of less than three years, turned negative last year, and last week the 5-year Japanese government bond (JGB) slipped close to zero several times. As of Monday morning Asian time, the yield was quoted at 0.018 percent, up from 0.005 basis points after market close on Thursday.


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