Bank of Japan ramps up bond purchases

The Bank of Japan increased the number of bonds it planned to buy during the day's operations on Wednesday, confirming its intention to defend its ultra-low interest rate policy amid a recent rise in yields, Reuters reports.

The market immediately reacted to the move, with the 30-year JGB yield dropping 12.5 basis points (bps) to 1.445%. The yield on the 20-year JGB fell 8.5 basis points to 1.110%. 

Naka Matsuzawa, strategist at Nomura Securities, said the market sentiment could be described as positive, as US Treasury yields have fallen, so JGB yields would have fallen anyway. However, the Bank of Japan wanted to send a message to the market that it intends to curb the rise in ultra-long bond yields.  

The latter measure by the BoJ was taken after it conducted an emergency bond purchase during two consecutive sessions last week, which led to a positive yield trend.

The Bank of Japan plans to buy bonds with maturities of 10 and 25 years for 350 billion yen ($2.36 billion), up from the planned 250 billion yen. It was also announced that the bank would buy bonds with maturities of 3 to 5 years for 575 billion yen, up from the planned 475 billion yen, and bonds with maturities of more than 25 years for 150 billion yen, up from 100 billion yen.