BOJ Takes the Fight to Bond Traders With Surprise Purchase

Central bank offers to buy debt on the day of 10-year auction
Move leaves a question mark on BOJ’s communication: Mizuho

Sayuri Shirai, former BOJ policy board member, examines the bank’s changes made to the monetary stimulus program.(Source: Bloomberg)

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By Chikako Mogi and Chikafumi Hodo

August 2, 2018 at 5:27 AM UTC

Updated on

August 2, 2018 at 7:52 AM UTC

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The Bank of Japan is showing just what it means by being flexible with bond purchases.

The central bank unexpectedly offered to buy 400 billion yen ($3.6 billion) of five-to-10 year bonds on Thursday to stem a selloff that saw the 10-year yield touch an 18-month high of 0.145 percent earlier in the day. Traders have been testing the limits of the BOJ’s patience since it said Tuesday it would allow the yield to go as high as 0.2 percent.