10-year JGB yields turn positive for the first time in six months as BoJ tweaks monetary policy

The Japanese government bonds slumped Wednesday after the Bank of Japan in its monetary policy decision kept its interest rates unchanged at -0.10 percent and added to continue its asset purchase until inflation stabilise around 2 percent target.

The benchmark 10-year bond yield, which moves inversely to its price, rose 6 basis points to 0.005 percent (turned positive for the first time in six months), the super-long 30-year note yield climbed 3 basis points to 0.55 percent and the short-term 2-year JGB yield bounced 1-½ basis points to -0.24 percent by 06:10 GMT.

At the two-day rate review that ended on Wednesday, the BOJ maintained the 0.1 percent negative interest rate it applies to some of the excess reserves that financial institutions park with the central bank. But it abandoned its base money target and instead adopted "yield curve control" under which it will buy long-term government bonds to keep 10-year bond yields at current levels around zero percent. The BOJ said it would continue to buy long-term government bonds at a pace so that ensures the its holdings increase by 80 trillion yen ($781 billion) per year, Reuters reported.

According to Reuters, the Bank of Japan added a long-term interest rate target to its massive asset-buying program on Wednesday, overhauling its policy framework and recommitting to reaching its 2 percent inflation target as quickly as possible. The central bank also said it will allow inflation to overshoot its target by maintaining an ultra-loose policy - beefing up its previous commitment to keep policy easy until the target was reached and kept in a stable manner.

Lastly, investors await the BoJ Governor Haruhiko speech for the future monetary policy direction.

Meanwhile, the benchmark Nikkei 225 closed up 1.91 percent at 16,807.62 and the broader Topix index closed 2.71 percent higher to 1,352.67 points.