The Bank of Japan showed that it wanted a slow rise in yields with a surprise bond purchase operation.
The Bank of Japan (BOJ), which shook global markets by stretching the yield curve control ceiling of 0.5 percent last Friday, signaled that it will slowly move towards tightening with an unscheduled bond purchase move this time.
After the Japanese 10-year bond yield increased to 0.605 percent, the BOJ purchased 5-10-year bonds with 300 billion yen on the market yields.
The 10-year return after the move is back to 0.59 percent. It was thought that the BOJ would tolerate an increase of up to 1 percent in bond yields with the decisions taken on Friday.
It was commented that this could lead to an outflow of Japanese investors in the US, European and Brazilian bond markets.
Keiko Onogi, Japanese Bond Strategist at Daiwa Securities, stated that the off-schedule bond purchase was a surprise, commenting, “The step was probably aimed at slowing the rate of increase in yields after the sharp rally in yields and before the 10-year bond auction on Tuesday.”