Bank of Japan to conduct unscheduled bond-buying operation

THE Bank of Japan (BOJ) announced an unscheduled bond operation on Tuesday (Oct 24), as it sought to slow a rise in Japanese government bond (JGB) yields that had brought them to fresh decade highs.

Japan’s central bank offered to buy 300 billion yen (S$2.7 billion) in bonds with maturities of five to 10 years and 100 billion yen worth with maturities of 10-25 years from Wednesday.

That was in addition to its daily offer to buy an unlimited amount of JGBs at a fixed rate of 1 per cent.

Following the BOJ’s announcement, the 10-year JGB yield declined 0.5 basis point to 0.855 per cent, earlier trading unchanged from Monday’s closing level of 0.86 per cent, which was the highest since July 2013.

Japanese yields have been pulled higher by a surge in US Treasury yields, with the benchmark 10-year note topping 5 per cent overnight to reach a 16-year high.

The BOJ caps the 10-year yield at 1 per cent under its yield curve controls, following a surprise policy tweak at the end of July. Although the yield remains well below that level, policymakers have stepped in repeatedly to slow the pace of increases.

SEE ALSO

When Japan ends negative rate policy, US Treasuries will suffer

BOJ's Ueda vows to 'patiently' maintain ultra-loose policy

Japan’s core inflation slows below 3% for first time in over a year

BOJ upbeat on regional Japan but warns of uncertain wage outlook

More

Asean Intelligence

Get insights into businesses across South-east Asia

Get the free report

The central bank next sets policy on Oct 31. REUTERS