The yield on five-year Japanese government bonds (JGBs) fell on Friday after the Bank of Japan said it would provide loans with the same maturity to banks, a move to contain elevated yields.
The five-year yield fell 0.5 basis points to 0.195%.
The BOJ said it would extend five-year loans against collateral to financial institutions for the third time since January. Details of the loans will be announced on Tuesday.
The BOJ last month amended rules for the funds-supply operation, so it can pump funds extending up to 10 years to financial institutions against collateral.
But market participants say its effect will be limited and the measure may not be sustainable.
“I am not sure how many more times the BOJ can conduct such operations,” said Kazuhiko Sano, a strategist at Tokai Tokyo Securities.
“Because, in part, it is difficult for financial institutions to secure collateral as they need collateral for BOJ’s other operations such as bond lending.” The BOJ last conducted such an operation on Jan. 31, after the five-year yield hit 0.2%.
The two-year JGB yield fell 0.5 bps to -0.045%.
The 10-year JGB yield was flat at 0.490%.
Yields on super-long notes tracked U.S. Treasury yields higher, with the 20-year JGB yield rising 1.5 bps to 1.325% and the 30-year JGB yield climbing 2 bps to 1.550%.
The 40-year JGB yield rose 2 bps to 1.790%.
Benchmark 10-year JGB futures fell 17 yen to 146.52, with a trading volume of 8,442 lots
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