BOND REPORT: Treasury Yields Rise As Bank Of Japan Cuts Bond-buying

By Sunny OhFeaturesDow Jones Newswires

Treasury prices fell, pushing yields higher, on Tuesday after the Bank of Japan reduced its bond purchases amid speculation that the central bank would signal an end to years of ultra-accommodative monetary policy.

What are Treasurys doing?

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The yield for the 10-year benchmark note rose to 2.501%, from 2.480% on late Monday, according to FactSet data. The 2-year note yieldwas flat at 1.960%. The 30-year bond yield climbed to 2.842%, versus 2.812%

What's driving markets?

The Bank of Japan cut purchases for its long-dated debt, drawing speculation that the central bank would ease away from loose monetary policy soon. Analysts say low interest rates in Europe and Japan have kept a lid on long-dated yields for U.S. government paper, which have struggled to perk up even after three rate hikes by the Federal Reserve in 2017.

But some tamped down on speculation that the move would mark a sea change for the BOJ as none of the members of its policy-making panel have advocated for any reductions to monetary stimulus.

The Treasury Department is set to sell $24 billion of 3-year notes at 10 a.m. Eastern. Trading for Treasurys is often influenced by a fresh influx of debt, potentially undercutting demand.

What did market participants say?

"We're not convinced [the BOJ's move] is indicative of a policy shift, as much as the fact that the reduction focused attention on the eventual need of the BOJ to cut purchases," wrote Aaron Kohli, a fixed-income strategist at BMO Capital Markets.

What else is on investors' radar?

Minneapolis Fed President Neel Kashkari will take part in a question-and-answer session at 10 a.m. Eastern.

At the same time, the Bureau of Labor Statistics will release the job openings and labor turnover survey, a gauge of the labor market's strength. Economists said the data are likely to reaffirm the prevalent perception of low unemployment.

What assets are on the move?

The yield for the 10-year Japanese government bond rose 1.1 basis point to 0.07%, according to Tradeweb data. Under the BOJ's yield-curve control program, the central bank pegs the 10-year yield to zero.

(END) Dow Jones Newswires

January 09, 2018 09:58 ET (14:58 GMT)