JGB yields fall on BOJ board member's less hawkish remarks

Japanese government bond (JGB) yields fell on Thursday after less hawkish remarks from a Bank of Japan board member, while regular reshuffling of key bond indexes supported demand for super-long bonds.

The five-year yield fell 1.5 basis points (bps) to 1.320% after hitting a 17-year high in the previous session.

The two-year JGB yield was flat at 0.975%, after hitting a 17-year high on Wednesday.


The BOJ can resume interest rate hikes as risks from U.S. tariffs subside but must do so at a "measured, step-by-step" pace, its board member Asahi Noguchi said.

"Noguchi said both the need for interest rate hikes and the reasons for not raising rates, but the reasons for holding the policy unchanged were more detailed," said Miki Den, a senior Japan rate strategist at SMBC Nikko Securities.

"That defied market expectations that she would be more hawkish."

The 10-year JGB yield fell 2 bps to 1.795%.

Yields on super-long bonds also fell as investors bought those debt ahead of a regular reshuffling of bond indexes, said Takashi Fujiwara, chief fund manager at Resona Asset Management.

Key indexes, such as Nomura BPI, will replace shorter-dated bonds with longer-dated notes at the end of the next session in a move known as "big extension."

The 20-year JGB yield fell 1.5 bps to 2.805%. The 30-year JGB yield fell 1 bp to 3.315%.

The 40-year JGB yield fell 2 bps to 3.660%.