Record Low Yield on 10-year Japanese Bonds

Hiruki Nakamura
19 Jan, 2015
New York City

Bank of Japan entered the bond market to acquire government bonds and 10-year debt yield fell to a record low of 0.2%. Japanese yen strengthened to a 117.17 against one dollar and industrial output declined 0.5% in November.

[R]4:30 PM Tokyo – Bank of Japan stepped up its plan to acquire government bonds and 10-year debt yield fell to a record low of 0.2%. Japanese yen strengthened to a 117.17 against one dollar and industrial output declined 0.5% in November.[/R]

Yields on government bonds dropped to a new low after Bank of Japan stepped up its purchase of bonds to ward of deflation forces and revive inflation in the stalled economy.

Bank of Japan today entered the market and looked to acquire 780 billion yen or $6.7 billion Japanese government debt of various maturities.

The yield of 10-year bonds fell four basis points to a record low of 0.2% and 20-year bond declined 0.865%, according to the data available from Japan Bond Trading Co.

The central bank’s action in the last year lifted bonds by 4.7% as the BoJ announced plans to offer unprecedented monetary stimulus.

The Ministry of Economy, Trade and Industry said seasonally adjusted industrial output in November dropped 0.5% from revised fall of 0.6% in a month ago.

For the year, industrial production declined 3.7% compared to a decrease of 0.8% in October.

The index of shipments for the month was unchanged at 1.4%, while the inventory index increased 1.1% compared to a preliminary estimate of 1% increase.

According to the Japan Department Stores Association, department store sales in December dropped 1.7% from a year ago month from 1% decrease in November.

The Nikkei 225 Stock Average jumped 150.13 or 0.9% to 17,014.29 and the broader Topix index increased 8.68 to 1,372.41.

The yen gained to close at 117.17 against one dollar.

Stocks in Review

Nippon Prologis REIT Inc increased 2.8% to 272,100 yen after the real estate developer reported net sales in the fourth-quarter ending in November jumped 5.9% to 13.44 billion yen from 12.69 billion yen a year ago period.

Net income in the quarter climbed 5.6% to 5.47 billion yen compared to 5.18 billion yen and earnings per share rose to 3,355 yen from 3,320 yen in the same period a year ago.

NTT Docomo Inc increased 1.1% to 1,934 yen after the communication service provider said Jspeak smart-phone voice translator application for foreign tourists in Japan is now available for users of Apple Inc.’s iPhone.

Sharp Corporation plunged 8.7% to 230 yen after the consumer goods and equipment maker forecasted earnings for the year ending in March to drop nearly half of previous estimate on the “deteriorated” sales in the home appliance and liquid crystal display segments.

TSI Holdings Co Ltd gained 1.6% to 638 yen after the fashion apparel designer said net sales in the third-quarter ending in November fell 1% to 133.64 billion yen from 133.97 billion yen a year ago period.

Net income in the quarter soared 26.4% to 747 million yen compared to 591million yen in the same period a year ago.