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Resumes Its Downtrend

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Corrections Remain Shallow

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Reverse Repo Operation, Inching Higher

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$1.5B Royal Bank of Canada 10Y Launched

COMMODITIES

WTI Remains Bullish, on Track for Cycle High Close

     TOKYO (MNI) - The Bank of Japan on Friday refrained from conducting a
market operation to buy an unlimited amount of Japanese government bonds with a
remaining life of 5 to 10 years at a fixed-rate of 0.110% because today's rise
in the 10-year JGB yield to what is seen as the upper limit of its "around zero
percent" yield target was modest.
     On early Friday morning, the 10-bond yield rose to 0.100%, which was higher
than 0.090% on Monday (up 6 basis points from July 20's close), when the BOJ
conducted a fixed-rate operation at 0.110% to stop the bond yield from rising
further.
     On Monday, the BOJ's market operation team had to take action as the rise
in the 10-year bond yield was rapid amid speculation that the BOJ board would
announce measures to reduce the side-effects of large-scale easing at its July
30-31 meeting.
     Compared to this, the 10-year bond yield rose gradually on Friday. It
traded at 0.100%, unchanged from the level before 1010 JST (0010 GMT) when the
BOJ usually conducts market operations.
     If the 10-year bond yield continued rising further, it would prompt the BOJ
to announce a fixed-rate bond buying operation at or before 1400 JST (0500 GMT)
Friday.
--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com