Bank Of Japan Cuts Bond-Buying By 30bn Yen - Biggest Taper Yet

Just two weeks after they last tapered their bond-buying program, The Bank of Japan reduced its purchases of 3-5Y JGBs from 330bn Yen to 300bn Yen - equal to the biggest 'taper' yet.

As Bloomberg reports, here’s a comparison of tonight's operations with the previous operations:

  • 250b yen of 1-3 year bonds vs 250b on Jun 6
  • 300b yen of 3-5 year bonds vs 330b on Jun 6
  • 190b yen of 10-25 year bonds vs 190b on Jun 8
  • 70b yen of bonds over 25 years vs 70b on Jun 8

In July, BoJ tapered by 30bn Yen: the Bank of Japan announced it would reduce the size of its purchases of five-to-ten year JGBs from Y500 billion to Y470 billion.

In early August, BoJ tapered by 30bn Yen

In late August, BoJ also tapered 30bn Yen.

In January, BoJ tapered by 20bn Yen:

  • 190b yen of 10-25 year bonds vs 200b on Dec. 28
  • 80b yen of bonds maturing in over 25 years vs 90b on Dec. 28

And in May, BoJ tapered its 5-10Y bond buying size from 450bn Yen to 430bn Yen.

After the last taper, some analysts hailed it as a victory for Kuroda - enabling him to tighten policy (normalize bond-buying further), because while bonds fell after the Bank of Japan’s surprise reduction in debt purchases but the limited reaction in the yen may pave the way for more cuts.

”It’s a victory by the BOJ, given the market consensus is that the bank can’t act as long as there’s wariness over yen appreciation. Yet the yen barely budged” and instead weakened.

But given a little time, it is clear that since then JGBs and Yen have been sold...

(Click on image to enlarge)

(Click on image to enlarge)

For now, there is no reaction in USDJPY.

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