Halister News

(Bloomberg) -- The Bank of Japan is likely to maintain the pace of bond purchases in August unchanged for all maturities given the debt market stability, according to MassMutual Life Insurance Co.

• BOJ likely to keep same ranges for all maturities while tweaks are possible, says Satoshi Shimamura, head of rates and markets for the investment strategy department in Tokyo
  • BOJ could keep 5- to-10-year purchase amount at 470b yen, although it could bring it back down to 450b, the level before July when it began stepping up purchases as 10-year yield surged
  • Unlikely each purchase for 5-to-10-year zone will be less than 450b yen
• As consensus view is 20-year sector has become expensive, it’s possible for BOJ to reduce buying if demand strengthens further for this sector
  • BOJ unlikely to see the current 20-year zone as overheated to such an extent it warrants a cut in buying
• North Korea issue risks pushing 10-year JGB yield closer to zero
  • If the tensions prompt yen to rise to 106-107 per dollar or Nikkei to plunge close to 19,000 levels, 10-year JGB yield is expected to fall below 0.05% even with BOJ cutting purchase amounts
• JGB market expected to move sideways until Fed’s Jackson Hole meeting late in August
• NOTE: BOJ is scheduled to announce its plans for outright bond purchases in August at 5pm local time

To contact the reporter on this story: Chikako Mogi in Tokyo at cmogi@bloomberg.net To contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net Patricia Lui