TOKYO: The Bank of Japan (BOJ) conducted an emergency bond purchase on Wednesday, offering to buy more bonds than at their previous unscheduled operation, but failed to ease Japanese government bond (JGB) yields off decade-peaks.
The benchmark 10-year JGB yield is currently hovering around 0.78%, its highest since September 2013, after having fallen slightly the previous day.
In addition to their regularly scheduled purchases of JGBs, the BOJ said on Wednesday it offered to buy 675 billion yen ($4.52 billion) worth of bonds with maturities between 5 and 10 years.
The central bank had announced on Monday that it would conduct the unscheduled bond-buying operation after the 10-year yield hit its highest in a decade that day.
Japan 10-year JGB auction average yield at 0.768%, yield at lowest accepted price 0.770%
“The BOJ offered to buy much more 10-year bonds than the market had expected but the effect was very limited,” said Kazuhiko Sano, a strategist at Tokai Tokyo Securities.
Elsewhere, the 20-year yield rose to a fresh peak of 1.55%, a level not seen since January 2014, while the five-year ticked up to 0.335%, more than a decade-high.
The BOJ also announced offers for their regularly scheduled purchases of other maturities. The amount remained unchanged for all bonds.
The additional bond-buying operation comes as speculation circulates about whether Japanese authorities intervened in the currency market overnight after the Japanese yen briefly weakened to 150 against the dollar before strengthening.
“With the yen falling to this level and growing speculation of the BOJ’s policy tweak, it’s hard to turn the momentum of rising yields around,” said Sano.
Yields have been rising globally, with U.S. Treasury yields reaching new 16-year highs on Tuesday amid worries that the Federal Reserve will hold interest rates higher for longer.
In contrast, the BOJ has yet to exit from its ultra-loose monetary policy, although anticipation has grown for a policy shift.
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