Halister News

(Bloomberg) -- Short-end Japanese government bond yields surged as the Bank of Japan did not announce an outright buying operation for that sector, says Naoya Oshikubo, a rates strategist at Barclays.

• The BOJ didn’t announce its outright purchase operation for 1-to-5-year sector Wednesday after buying four times this month
  • In December, BOJ changed frequency of bond-purchase operations to a range from a set number, giving itself more flexibility
  • It said the frequency of buying operations will be about 5-7 times for each of the 1-to-5-year and 5-to-10-year categories in January compared to 6 times each previously
  • BOJ’s outright operations announced Wednesday include 10-to-25-years and more-than-25 years maturities and is the 9th operation this month; BOJ conducts outright buying operations 8 to 10 times per month
• “The fact the BOJ didn’t do anything sparked broad selling including in the super-long maturities. It would mean the BOJ would reduce buying in this sector to five from six previously”
  • Stability in 10-year yields was probably the reason for no buying; Oshikubo
• “It is an irregular operation even in light of the change in frequencies”