MNI POLICY: BOJ Cuts Scale of 5-10 Yr JGB Buying On Low Yields

     TOKYO (MNI) - The Bank of Japan Friday lowered the size of its purchases of

Japanese government bonds with a remaining life of 5 to 10 years to Y400 billion

from Y450 billion at the previous similar operation on Aug. 23.

     The reduction was expected by some bond players, as JGB yields have fallen

recently on the back of tight supply/demand and the hope for a rate cut by the

U.S. Federal Reserve.

     The BOJ lowered the scale of its purchases of long-term bonds on Aug. 16 to

Y450 billion from Y480 billion.

     The 10-year bond yield rose to -0.275% after the operation from -0.285%

traded in the early morning but the impact on JGB prices was limited. The

10-year bond yield fell to -0.290% on Thursday, the lowest level since July

2016.

     Friday's decision indicates that the BOJ could lower its range of JGB

buying with a remaining life of 5 to 10 years from between Y300 billion and Y650

billion. The BOJ will publish its guidelines for its buying operations for

September at 1700 JST (0800 GMT) Friday.

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

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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