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30-year JGBs slump after BOJ trims buying, other maturities firm

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[June 19, 2014] TOKYO (Reuters) - The price of 30-year Japanese government bonds fell on Thursday after the Bank of Japan said it may trim the amount it purchased of those maturities, while shorter-dated debt held firm.

The yield on the 30-year JGB rose 3.5 basis points to 1.695 percent, the biggest intraday rise in three months.

The BOJ said late on Wednesday that purchases of maturities exceeding 10 years in its regular market operations will be cut to between 130 billion yen and 350 billion yen ($1.3 billion and $3.4 billion) from 150 billion and 350 billion yen now.

The small fine-tuning was enough to unsettle a market that has become so dependent on the BOJ, which buys an amount equal to 70 percent of new JGB issues in its quantitative easing programme.

Shorter maturities fared better, taking their cue from a rise in U.S. bond prices after the Federal Reserve took a more dovish stance on monetary policy than some market players had expected.

The Fed showed no particular discomfort on inflation despite a recent pick up in prices, and it lowered the long-term projections for interest rates.

The 10-year JGB yield fell 0.5 basis point to a two-week low of 0.585 percent while the price of 10-year JGB futures rose 0.12 point to 145.39.

(Reporting by Hideyuki Sano; Editing by Shri Navaratnam)

[ 2014 Thomson Reuters. All rights reserved.]

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