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MNI INSIGHT: BOJ May Drop Long-End JGB Ops Frequency Schedule

MNI (Tokyo)

The BOJ may step back from publishing the timetable for longer-dated JGB buying operations, giving the markets department greater flexibility.

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The Bank of Japan may step back from publishing the frequency of its longer-dated bond buying operations, leaving the operational timing to the Financial Markets department as it seeks to meet the Board's intention of slightly steepening the longer-end of the curve, MNI understands.

Each month, the BOJ schedule will include the expected range of longer-dated purchases despite not announcing the actual dates of buy-backs. This, it is hoped, will inject the degree of volatility into the market wanted by the BOJ board.

There will be no change to the published schedule or size of the benchmark 10-year operations, as the BOJ still considers this the main buying operation and intends to continue with clear operational signals. The Bank continues to buy JGBs in this part of the curve in considerable size and does not want to add the potential for increased volatility around the time of scheduled operations as market players look for central bank activity.

The bank has been reducing its overall purchases of longer-end bonds but would like to see the purchases reduced further before moving to more ad hoc buy-backs in that bucket of the curve.

The monthly JGB operations calendar has been published since early 2017, laying out the next month's program on the last trading day of a month.