Long-term interest rate - the national debt yield also dropped after the Bank of Japan introduced new measures

Recently the NHK News On-line reported the following:

長期金利 国債利回りは日銀の新措置後も低下

2018年7月31日 18時04分

31日の国債の市場では、日銀が金融政策決定会合で長期金利の一定の上昇を容認することを決めたものの、引き続き、大規模な金融緩和が続くことに変わりはないとの見方から国債が買われ、長期金利は低下しました。

31日の国債の市場では、日銀の金融政策決定会合の結果を受けて、午後に入って日本国債を買う動きが強まり、国債の価格は上昇しました。

国債は価格が上がると利回りが低下する関係にあり、長期金利の代表的な指標である満期までの期間が10年の国債の利回りは、会合の結果が公表される前より一時、0.045％低下して0.045％となりました。

市場関係者は、「現在０％程度としている長期金利の誘導目標が引き上げられるのではないかという観測からこのところ国債が売られ、利回りが上昇していた。しかし、金融政策決定会合の結果を受け、大規模な金融緩和が続くことに変わりはないとの受け止めが広がったことから国債を買い戻す動きが強まった」と話しています。

Translation

About the market of national debt on the 31st, the Bank of Japan at a financial policy decision meeting had decided to approve a certain level of rise in the fixed long-term interest rate, yet at the same time there was no change in that it would continue easing the financial situation in large-scale; the national debt were being bought and the long-term interest rate fell.

The national debt market on the 31^st, in response to the decision of the financial policy meeting of the Bank of Japan, entering the afternoon there was a strongthening movement to buy Japanese government bond, and the price of the national debt rose.

A relation existed in that when the price of national debt rose, the interest yield would fall. The national debt of the ten-year maturity period, as an index of the typical long-term interest rate, fell by 0.045 % to stay at 0.045% for a short moment compared with the rate before meeting decisions were released.

Some people related to the market said that “as the desired target of the long-term interest rate now set to about 0 % at present may be increased, based on that observation the government bonds were being sold at this time, and the interest rate went up. But upon hearing the outcome of the financial policy meeting decision in that there would be no changes in continuing with a large-scale credit easing, it was widely accepted and a movement to repurchase national debt was strengthened."

So the Bank of Japan is closely monitoring changes in the price government bonds.