Bank of Japan initiates unscheduled bonds buy-back

The Bank of Japan has announced an impromptu bonds buy-back operation as part of its effort to curb the unprecedented rise in yields.

Some industry experts have called this the worst quarterly sell-off in over twenty years, as the apex bank loosens its grip market. An ex official of the Bank of Japan painted an even grimmer picture in his predictions in which he cited the possibility of benchmark yields rising even further to 2%.

This unexpected move has been made necessary by the continuous increase in Japanese yields. Reports show that the upward trend has persisted, particularly this week, with 10-year JGB yields climbing as high as 0.77% today.

Notwithstanding the recent decision by the Bank of Japan to allow the yields to roam above the 0.50% line, some market observers have said that policymakers would still like to have a degree of hold on the situation to avoid a situation where it roams towards the 1.00% mark quicker than expected.

This buy-back can be viewed by some investors as a reminder that the Japan’s debt market depends partly on the backing of public-sector institution, including the Bank of Japan, for the edge it seems ton have over global peers.