Japan’s 10-year bonds fell for a fourth day as the yen retreated from a 15-year high, damping demand for the relative safety of debt. Benchmark 10-year yields climbed to a three-week high on prospects the currency’s slide will reduce pressure on the Bank of Japan to announce additional easing measures at its policy meeting tomorrow. Japan’s bonds also declined after Treasuries dropped yesterday on prospects debt purchases by the Federal Reserve will spur inflation. “A pause in the yen’s advance doesn’t give the BOJ an incentive to take additional action,” said Tadashi Matsukawa, head of fixed income at PineBridge Investments Japan Co., which manages the equivalent of about $70 billion. “Yields seem to be bottoming out globally.” The yield on the 0.8 percent bond due September 2020 rose 3.5 basis points to 0.945 percent, the most since Oct. 4, at 3:03 p.m. in Tokyo at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The price fell 0.312 yen to 98.689 yen. A basis point is 0.01 percentage point. Twenty-year yields gained five basis points to 1.81 percent. Ten-year bond futures for December delivery dropped 0.24 to 143.18 as of the afternoon close at the Tokyo Stock Exchange. The yen slid for a second day, touching 81.82 per dollar. It reached 80.41 on Oct. 25, the strongest since April 1995. Yield Forecast Ten-year yields may rise to 1.2 percent by year-end, according to PineBridge’s Matsukawa. Should his forecast prove accurate, investors who purchase the securities today will incur a 2.1 percent loss, Bloomberg calculations show. Japan’s central bank unexpectedly cut rates to near zero on Oct. 5 and decided to create a 5 trillion-yen ($61 billion) fund to purchase assets. All 15 economists surveyed by Bloomberg News said the BOJ will refrain from easing policy further tomorrow. Fed policy makers, who already cut interest rates almost to zero and bought $1.7 trillion of securities, are mulling more asset purchases to flood markets with cheap money and prevent stagnating prices from undermining the recovery. The Fed may announce a new round of so-called quantitative easing measures at its next meeting on Nov. 2-3. Treasury 10-year yields gained eight basis points to 2.64 percent yesterday, according to BGCantor Market Data. Japan’s sale of two-year notes today drew bids worth 5.54 times the amount on offer, compared with a so-called bid-to- cover ratio of 5.75 at the September sale. The lowest price at the sale was 99.920, higher than 99.915, the median forecast of 14 traders surveyed by Bloomberg News. “The auction was fine,” said Akito Fukunaga, chief rates strategist in Tokyo at Royal Bank of Scotland Group Plc., Britain’s biggest government-owned bank. “We continue to see steady demand for short-term notes.” To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net. To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.

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