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2026-02-13 17:42:19
[Japanese Government Bond Futures Remain Stuck at Current Levels; Steepening Yield Hints at Central Bank's Aggressive Move] ⑴ Japanese government bond futures remained volatile on Friday, opening 34 points higher at 131.89, before touching an intraday high of 132.02. This was driven by buying interest following a sharp drop in US Treasury yields. Yields on 10- to 15-year bonds fell 3.5 basis points in the morning session, with the 10-year yield briefly dropping to 2.195% before rebounding quickly, failing to hold below 2.20% for the second consecutive day. ⑵ However, around 10:25, futures turned lower, touching 131.69, with selling pressure emerging on 40-year bonds, while 12-year bonds saw steady buying, suggesting positive demand for the day's 5- to 15.5-year non-active bond auctions. (3) Following a hawkish speech by Naoki Tamura, a member of the Bank of Japan's Policy Board, futures prices accelerated their decline to 131.52. Tamura stated that Japanese inflation is becoming sticky and that the price target could be achieved as early as this spring. He also hinted at a neutral interest rate range of 1% to 2.5%. This statement pushed yields for 2-year, 5-year, 10-year, 20-year, and 30-year maturities to their intraday highs (1.295%, 1.70%, 2.235%, 3.08%, and 3.46%, respectively). (4) Buying on dips subsequently drove a rebound in futures prices, with yields for maturities under 20 years falling again. However, the steepening yield curve remained unchanged, with particularly strong buying interest in 16-year maturities. The yield on the 0.8% coupon JL180 maturing in March 2042 fell by 3.5 basis points in a single day, possibly reflecting institutional demand for replenishing positions in maturities missed in the secondary market. The bidding results for the 0.4% coupon JL173 maturing in June 2040 also showed strong demand. (5) The futures market fluctuated between 132.02 and 131.52 throughout the day, completely overlapping with yesterday's range, indicating that the market is stuck between the Bank of Japan's hawkish shift and the linkage with overseas bond markets. Going forward, attention will be focused on the timing of the spring price target confirmation and the pressure from the neutral interest rate guidance on reshaping long-term pricing.
