MNI: BOJ Leaves JGB Buying Unchanged; Watching for Yield Rise

     TOKYO (MNI) - The Bank of Japan on Friday left the scale of its purchases

of Japanese government bonds unchanged because the upward pressure on JGB yields

was limited despite an unexpected jump in U.S. Treasury yields overnight.

     The amount of Friday's JGB purchases with a remaining life of 5 to 10 years

was Y410 billion, unchanged from the previous similar operation conducted on

Monday.

     The BOJ also maintained the scale of its purchases of longer-term JGBs at

Y190 billion for those with a remaining life of 10 to 25 years and at Y80

billion for those with a remaining life of over 25 years.

     However, the BOJ stands ready to prevent an undesirable surge in JGB yields

by increasing the amounts of its outright or fixed-rate bond purchases. The

central bank believes the current yield curve based on the 10-year yield around

zero percent is necessary to keep the momentum toward achieving its 2% inflation

target.

     The 10-year JGB yield traded at 0.080% on Friday, up 0.5 basis points from

Thursday's close. It rose to 0.090% on Thursday for the highest level since July

12, 2017.

     The U.S. Treasury 10-year yield rose to 2.626% on Thursday, hitting the

highest level since March 14, 2017.

     BOJ officials don't think the U.S. Treasury 10-year yield will rise to a

long-term equilibrium rate of 2.75% anytime soon because wages and inflation are

still tame.

     They also believe any sharp rise in JGB yields would be temporarily and

limited unless the U.S. 10-year yield rises above the key level.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com

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