Japanese government bond prices dipped on Tuesday, the last day of the Japanese financial year, weighed down by worries about a probable increase in government debt issuance to finance its massive stimulus.

Government sources told Reuters on Monday that Japan will boost government bond issuance by 16 trillion yen ($148 billion)in the next fiscal year starting from April to fund a massive stimulus package aimed at combating the hit to the economy from the coronavirus pandemic.

The government will increase issuance for JGBs of all maturities excluding 40-year bonds, inflation-linked bonds and liquidity-supplying bonds, and the increase is likely to start from July, they said.
But the losses were mitigated by expectations that the Bank of Japan will likely step up buying if an increase in debt issuance threatens to cause a sharp fall in JGB prices and boost their yields.

Benchmark 10-year JGB futures fell 0.29 point to 152.44, with a trading volume of 9,240 lots in late afternoon trade.

The benchmark 10-year JGB yield rose 1.5 basis points to 0.015%. For the quarter, it was up 4 basis points.

The 20-year JGB yield rose 1 basis point to 0.300%. The 30-year JGB yield rose 1 basis point to 0.405%.

At the shorter end, the two-year JGB yield rose 3 basis points to minus 0.140% while the five-year yield rose 2 basis points to minus 0.105%.

The Japanese bond market as a whole is on course to post its second consecutive quarter of fall in January-March, measured by Nomura BPI, a popular benchmark.
As of Monday, the market's total return was -0.289%.

Reuters