MNI BRIEF: BOJ Extra JGB Buying, Fixed-Rate Operations Eyed

The Bank of Japan may consider conducting an extraordinary outright purchase of Japanese Government Bonds (JGBs) and buying at a fixed-rate to curb higher yields if the 10-year yield continues rising next week, MNI understands.

BOJ outright purchases of JGBs are not scheduled on Monday and Tuesday, and the BOJ plans to conduct operations on Wednesday. The 10-year JGB yield closed at 0.200% on Friday for the highest level since Jan. 29, 2016, when the BOJ announced the introduction of the negative interest rate policy, see: MNI BRIEF: BOJ's Wakatabe Rules Out Yield Curve Adjustments.

The 10-year bond yield at 0.200% is still within the range of between around plus and minus 0.25% that the BOJ targets, and the JGB higher yields are driven by the rise in U.S. Treasury bond yields. But if the BOJ sees the necessity to curb higher JGB yields it will act even before the 10-year bond yield rises to 0.25%, MNI understands.