Front-End JGBs Sold; Curve May Bear-Flatten, MUFJ Trust Says

(Bloomberg) -- Bank of Japan’s decision today has had a limited market impact given that there was no surprise, says Hideo Suzuki, chief manager, forex and financial products trading at Mitsubishi UFJ Trust and Banking.

Yield curve flattened ahead of BOJ’s decision; short- and medium-term bonds were sold to price in no policy change while super-long notes rallied on dip-buying demand from investors, Tokyo-based Suzuki says by phone

Market participants probably believe yield of 0.50%-0.55% for 20-year JGBs and 0.75%-0.80% for 30-year notes as levels to buy

Yield curve may bear-flatten should speculation grow BOJ won’t expand negative rates and instead expand QQE

NOTE: BOJ voted 7-2 to leave negative rates unchanged; keeps monetary base target at 80t yen

2-year yield rises 2 bps to -0.15%, 5-year yield adds 2.5 bps to -0.145% and 10-year yield climbs 2 bps to -0.02%

20-year yield declines 2 bps to 0.450%, 30-year yield falls 4.5 bps to 0.695%