US Treasury / JGB Premium Double From One Year Ago

The extra yield Treasuries pay over Japanese bonds doubled from a year ago as the Bank of Japan said it’s sticking to its plan to push down borrowing costs.

Futures contracts indicate traders expect the Federal Reserve to raise U.S. interest rates in September 2015 as the economy improves. The central bank is scheduled to issue the minutes of its March meeting tomorrow, after making a third cut to the debt-purchase program it uses to support the economy. The BOJ will probably boost stimulus in July, according to a survey of economists. The U.S. plans to sell $30 billion of three-year notes today.

“The BOJ will continue to ease monetary policy while the Fed continues to taper,” said Hiroki Shimazu, an economist in Tokyo at SMBC Nikko Securities Inc., a unit of Japan’s second-largest publicly traded bank as measured by market value. “That will lead to a larger spread.”

U.S. 10-year yields were little changed at 2.71 percent as of 6:47 a.m. in London, according to Bloomberg Bond Trader prices. The figure compares with the average over the past decade of 3.46 percent. The price of the 2.75 percent security due in February 2024 was 100 3/8.

Bloomberg

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