Japanese bonds gained for a second day on expectations the Bank of Japan will discuss further easing measures at a two-day policy meeting starting today, after its U.S. counterpart announced a plan to buy more debt. Benchmark yields fell from near a five-week high as 10-year Treasury rates slid for a third day after the Federal Reserve said it will purchase an additional $600 billion of Treasuries through June. The yen approached a 15-year high against the dollar, damping the earnings outlook for Japanese exporters. “The Federal Reserve’s decision spurs speculation the Bank of Japan will introduce additional easing steps,” said Ayako Sera, who helps oversee about $310 billion in Tokyo as a strategist at Sumitomo Trust & Banking Co. “Japanese bonds are also influenced by the decline in U.S. Treasury yields.” The yield on the benchmark 10-year bond declined 1.5 basis points to 0.92 percent as of 3:13 p.m. in Tokyo at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The 1 percent security due in September 2020 added 0.136 yen to 100.723. A basis point is 0.01 percentage point. Ten-year yields climbed to as high as 0.975 percent on Nov. 2, the most since Sept. 27. Japan’s financial markets were closed yesterday for a national holiday. Ten-year bond futures for December delivery advanced 0.25 to 143.28 at the 3 p.m. close of the Tokyo Stock Exchange. Ten- year Treasury yields slid three basis points to 2.54 percent. BOJ Easing Bank of Japan Governor Masaaki Shirakawa said the central bank’s 5 trillion-yen asset fund ($62 billion) shows its resolve to support the nation’s expansion. The program “suggests that we stand ready to counter downside risks for the economy and that can provide relief to financial markets and have a positive effect on corporate sentiment,” Shirakawa said at an economic forum in Tokyo today. “We need to continue to take appropriate policy action.” Shirakawa and his policy board are meeting to decide how it will purchase exchange-traded funds and real-estate investment trusts, part of plans unveiled last month to help stem deflation and shelter the nation’s expansion from a strengthening yen. He said today the purchases of such assets are “extraordinary” and “unprecedented” for a central bank. The Fed will spend about $75 billion a month on buying Treasuries, the Fed’s Open Market Committee said yesterday. The U.S. central bank “will adjust the program as needed to best foster maximum employment and price stability,” it said. The yen appreciated to 80.79 per dollar from 81.07 yesterday in New York. It advanced to 80.22 on Nov. 1, the highest level since April 1995. A stronger yen reduces the value of overseas sales at Japanese companies when repatriated. To contact the reporter on this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net. To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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