Pension funds are buying Japanese government bonds to rebalance their portfolios ahead of the March fiscal year end, pushing the bond prices higher, a market participant said.
The 10-year JGB yield fell 0.5 basis point to 0.105%.
The BOJ may tweak a three-tier deposit system at its two-day policy review, ending on Friday, to exempt a larger portion of reserves from negative interest rates, said sources familiar with its thinking.
The two-year JGB yield fell one basis point to minus 0.140%, while the five-year yield fell one basis point to minus 0.090%.
The 20-year JGB yield was unchanged at 0.490%.
The 30-year JGB yield rose 1 basis point to 0.675% and the 40-year JGB yield rose 1.5 basis points to 0.715%.
Benchmark 10-year JGB futures rose 0.08 point to 151.07, with a trading volume of 15,985 lots. (Reporting by Tokyo markets team; Editing by Rashmi Aich)