BoJ: Less attention to smaller JGB purchases - Nomura


Yujiro Goto, Research Analyst at Nomura, explains that the BOJ has reduced the amount of its 3-5yr JGB purchases slightly from the previous purchase operation as the Bank bought JPY380bn of 3-5yr JGBs, while it purchased JPY400bn previously.

Key Quotes

“The BOJ is scheduled to announce its JGB purchase schedule for April on Friday, but it reduced the amount before the announcement of the schedule. The JGB market’s reaction was limited, as was the FY market’s reaction. Expectations for rate hikes by major central banks have receded recently, which likely made it easier for the BOJ to reduce the size of the purchase without much JGB volatility.” 

BOJ Governor Kuroda re-emphasised the strength of the yield curve control framework at his speech last Friday and the Bank is likely to continue to adjust the amount of JGB purchases flexibly to achieve the desired curve. Governor Kuroda said “yield curve control is designed to enable the Bank to conduct monetary policy in a more flexible manner, depending on the situation, compared to the previous frameworks in which the amount of JGB purchases was fixed.” Then, he said the impact of a unit amount of JGB purchases could be significant if JGBs to be purchased become scarce. These comments re-emphasise the departure from quantity commitments towards a lower yield curve. The BOJ is likely to keep gradually reducing its JGB purchases, while a temporary rise in the purchase amount is possible to stem volatility as in February.”

As the Bank is expected to reduce its JGB purchases gradually, the calm market reaction today was likely encouraging for the Bank. Volatility in the Japanese financial market has been low, which may encourage foreign bond investment by insurance companies as the new fiscal year starts next week. While market expectations for rate hikes by the Fed have declined recently to the level at end-February, two more rate hikes by the Fed in 2017 are still the most likely scenario, while the ECB’s policy normalisation is likely approaching. We expect the BOJ’s dovish stance, which is evident in lower yields not the quantity of JGB purchases, to remain as JPY negative.”

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

Recommended content


Recommended content

Editors’ Picks

EUR/USD clings to gains above 1.1500

EUR/USD clings to gains above 1.1500

Following the U-turn in the US Dollar, EUR/USD rose to the 1.1550 region on Monday, where a decent resistance seems to have emerged so far. In the meantime, the Greenback continues to suffer the dovish message from FOMC’s Bowman, while geopolitical concerns continue to limit the downside.

Could Iran block the Strait of Hormuz? Why Oil is on edge after US strikes

Could Iran block the Strait of Hormuz? Why Oil is on edge after US strikes

As the Israel-Iran conflict reaches new heights, an old threat is coming back to haunt the markets: that of the closure of the Strait of Hormuz. This narrow arm of the sea in the Persian Gulf, wedged between Iran to the north and the United Arab Emirates and Oman to the south, is much more than a simple sea passage.

Gold treads water below $3,400 on stronger USD

Gold treads water below $3,400 on stronger USD

Gold begins the week on a downward trend, trading below the key $3,400 mark per troy ounce. In the meantime, the precious metal has managed to limit its losses amid the stronger US Dollar (USD) and rising geopolitical tensions in the Middle East.

AI Tokens Price Prediction: Story, Virtuals Protocol rebound following sell-off after US strikes on Iran

AI Tokens Price Prediction: Story, Virtuals Protocol rebound following sell-off after US strikes on Iran

Geopolitical tensions in the Middle East caused a liquidation havoc of over $1 billion in the cryptocurrency market over the weekend, following US President Donald Trump’s direct involvement in the conflict between Israel and Iran.

GBP/USD climbs to daily highs around 1.3480

GBP/USD climbs to daily highs around 1.3480

After bottoming out in multi-week lows near 1.3370, GBP/USD now picks up pace and gains around a cent to hit new daily peaks around 1.3480 in response to fresh selling pressure hitting the Greenback. The knee-jerk in the US Dollar comes despite steady fears on the Iran-Israel-US front and firm results from preliminary US PMIs for the month of June. On the UK docket, all the attention remains on upcoming flash Manufacturing and Services PMIs.

The Best brokers to trade EUR/USD

The Best brokers to trade EUR/USD

SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.

Forex MAJORS

Cryptocurrencies

Signatures

Best Brokers of 2025