Japanese Markets Swayed as BOJ Intervention Plunges Yields

• Japanese 30 year bond yields plunged as BOJ said it was willing to buy unlimited 10 year JGBs
• The Nikkei 225 rallied nearly 0.65% as the Japanese Yen weakened against its major counterparts
• The Bank of Japan also announced an increase in 5-10 year JGB purchases, from ¥450b to ¥500b

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The Japanese Yen weakened against its major counterparts during this past trading session as the Bank of Japan announced it was prepared to purchase an unlimited amount of 10-year fixed interest Japanese government bonds (JGBs). They also increased the amount of 5- to 10-year JGB purchases from 450 billion yen to 500 billion. These efforts from the BOJ targeted long-term yields, which have been rising steadily since mid-2016.

Following the open market operations and announcement from the BOJ, Japanese 30-year bond yields fell 4 basis points in a mere 5 minutes. That is a dramatic pickup in volatility considering an average daily range of just 1.1 basis points over the past month. That move was echoed by 10-year JGBs, where yields fell 2.2 basis points. The Nikkei opened the session lower but quickly strengthened alongside a weakening Yen, as the BOJ took part in open market operations.