Home / NEWS / Asia-Pacific News / Bank of Japan offers ‘unlimited’ bond buying to curb rising yields

Bank of Japan offers ‘unlimited’ bond buying to curb rising yields

Critical buying of JGBs raises the price of bonds to force down their gain, an essential element of the BOJ’s ultra-loose yield curve control (YCC) policy.

It was the earliest time in more than six months that the BOJ has conducted special functions to buy bonds to achieve the yields it wants to see, rather than the auctions occupied in regular operations – a powerful show of force to direct the market.

On top of that, the BOJ broadened the amount of its planned buying in five- to 10-year JGBs to 450 billion yen from the 410 billion amount it has favored since past due August. Following the BOJ’s operations, the price of the 10-year JGB futures rose to as extraordinary as 150.31 from the day’s low of 150.09. It was up 0.11 on the day.

The benchmark 10-year cash JGB renounce edged down to 0.090 percent, the same level as its previous secluded, from 0.095 percent touched earlier.

JGB yields have take flighted in recent weeks, in line with global peers, on rising guesses that the world’s central banks are increasingly leaning towards claptrap back stimulus as the global economy gains momentum.

Investors deceive started to speculate that the BOJ could also be moving towards an outlet from ultra-easy policy, although BOJ Governor Haruhiko Kuroda has confuted that he was considering such a major policy adjustment in the near tomorrow.

“I think the BOJ took pre-emptive steps to fend off further rises in JGB supplies. JGB prices recovered so I think it was a success at least for now,” said Naoya Oshikubo, yen values strategist at Barclays.

“But given that the main reason for higher yields turn from foreign bonds, the market will likely remain capped,” he totaled. Indeed the impact of the BOJ’s action quickly evaporated in the currency market, on which the BOJ has teeny control.

The yen briefly weakened to 109.66 per dollar from around 109.45 but post-haste pared its losses.

Check Also

Mainland stocks subdued as China reports its exports and imports rose; Hong Kong suspends trading for the day

SINGAPORE — Barter in Hong Kong was suspended on Tuesday due to Typhoon Nangka, while …

Leave a Reply

Your email address will not be published. Required fields are marked *