Home >market >stock-market-news >Japan’s 10-year yield plunges to zero, a first for G-7 nations

Tokyo: The yield on Japan’s benchmark 10-year government bonds fell to zero for the first time, an unprecedented low for a Group-of-Seven economy, as global financial turmoil and the Bank of Japan’s adoption of negative interest rates drive demand for the notes.

The 10-year yield has tumbled from 0.22% before the BOJ surprised markets with the decision on 29 January to introduce a minus 0.1% rate on some of the reserves financial institutions park at the central bank. It fell four basis points to zero percent as of 10:17am in Tokyo.

Japanese bonds are also climbing as sovereign securities rally worldwide. Global stocks have dropped almost 10% this year on concern growth is slowing in China, and as slumping oil prices undermine policy makers efforts to revive inflation. About 29% of the outstanding debt in the Bloomberg Global Sovereign Bond index was yielding less than zero as of 5pm in New York on Monday. Swiss 3% notes due in 2018 were offering the lowest yield in the index, according to data compiled by Bloomberg.

“In the next month or so, the JGB market will be volatile until players find a level to settle," said Naoya Oshikubo, a rates strategist at Barclays Plc in Tokyo. “The 10-year yield will likely stabilize in a 0-0.2% range eventually, finding a floor around zero."

The expected price volatility for Japanese debt over a 60- day period soared to 3.12% on Friday, the highest level since June, according to data compiled by Bloomberg. Bloomberg

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