The Japanese long term 30-year debt rallied on Thursday in end session as the BoJ announced April JGB purchasing operation plan. The BoJ in its release mentioned that they have increased the size of the 25- to 40-year bucket back to Y180bn, the original amount it had purchased in early- to mid-March (but the size was reduced to Y160bn on 24 March).
The 30-year rallied to 0.43% and traded twice there, versus 0.525% seen at close and 0.50% yesterday.
The JGBs remained weak in the afternoon, but swap rates were unable to keep up with JGBs, thus resulting in tighter swap spreads. Meanwhile, 30-year bonds recovered some of the earlier losses, 10s/20s returned to the unchanged level of 36.625bp, while 20s/30s tightening to 11.375bp.
We do expect that profit-taking to come into the market in the early stage of the new fiscal year, but the rally may possibly invite even stronger profit-taking selling on Friday.
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