As US Treasury Yields Surge... Bank of Japan Executes Unscheduled Government Bond Purchases

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] As expectations spread in the market that the Bank of Japan (BOJ) may reduce its accommodative monetary policy, Japanese government bond yields rose, prompting the BOJ to conduct an unscheduled bond purchase on the 21st.

According to Bloomberg News, the BOJ announced that it would purchase 150 billion yen worth of government bonds with remaining maturities exceeding 5 years but not exceeding 10 years, and 100 billion yen worth of bonds with maturities exceeding 10 years but not exceeding 25 years. This was not included in the bond purchase schedule disclosed by the BOJ last month.

This decision by the BOJ came after the yield on Japan's 3-year government bonds exceeded 0.25% for the first time in three months. As part of its accommodative monetary policy, the BOJ sets the upper limit for the 10-year government bond yield, a long-term interest rate benchmark, at 0.25%.

Mari Iwashita, Chief Market Economist at Daiwa Securities, interpreted, "The unscheduled purchase is a message to curb the rise in interest rates," adding, "It may be a warning against incorrect speculation about a sudden adjustment in BOJ policy."

With major central banks, including the U.S. Federal Reserve (Fed), set to announce monetary policy decisions this week, there are concerns that the high-intensity tightening policies aimed at lowering inflation may continue longer than expected. The BOJ is also holding a two-day monetary policy meeting starting today to decide on interest rate levels.

As a result, government bond yields in major countries have surged simultaneously. On the 20th (local time) in the New York bond market, the U.S. benchmark 10-year government bond yield rose 7 basis points (1bp=0.01 percentage points) from the previous session to 3.56%. The 2-year yield, sensitive to monetary policy, also rose to 3.97%, approaching the 4% level. European government bond yields also surged sharply.

This content was produced with the assistance of AI translation services.