Japan Government Bonds Steady Ahead of BOJ Decision as Strong 2-Year Auction Supports Market

Japanese government bonds held steady on Thursday, a day before the Bank of Japan's monetary policy decision, with strong demand at a two-year note auction providing support. The benchmark 2-year JGB yield eased half a basis point to 1.895%, reversing an earlier small rise, after the bid-to-cover ratio rose to 4.03 from 3.89 at last month's sale. The 10-year yield added 0.5 basis point to 2.83%, the 5-year was flat at 2.265%, and the 30-year edged up half a basis point to 3.88%. The market was also buoyed by gains in U.S. Treasuries after the Federal Reserve left rates unchanged and gave few signals on a December hike. Mizuho Securities analyst Yuhi Kawano said the Fed outcome was perceived as less hawkish than expected, reducing pressure on the BOJ to raise rates quickly. A Reuters poll of economists expects the BOJ to hold rates on Friday and hike a quarter-point in December.