Japanese government bonds are headed for the longest run of annual gains on record, buoyed by central bank purchases almost equivalent to Malaysia's economic output.
The bonds have returned 2.1 percent on an annualized basis in 2012, set for a ninth year of gains that's the longest streak since at least 1986, a Bank of America Merrill Lynch index shows. Ten-year yields have declined 22 basis points to 0.76 percent. U.S. Treasuries are poised to post a third annual gain with a 2 percent return, while the benchmark rate has fallen 10 basis points.
The Bank of Japan's JGB holdings increased by ¥22.6 trillion ($267 billion) in 2012 as it sought to pump funds into a deflation-plagued economy that contracted for two quarters through Sept. 30. With incoming Prime Minister Shinzo Abe planning a "large-scale" extra budget to bolster growth, analysts forecast the 10-year yield will rise to 0.99 percent by the end of 2013, a Bloomberg survey shows, which would still be the third-lowest globally.