Investing.com - The yield on the key 10-year Japanese government bond reached a new nine-year high on Thursday, only to retreat following another intervention by the Bank of Japan (BOJ) aimed at tempering its rapid ascent. The central bank proposed a purchase of bonds worth 300 billion yen ($2.09 billion) with five to ten years remaining until maturity and an additional 100 billion yen for papers maturing within three to five years.
This was after the yield on these decade-long bonds rose up to 0.655%, marking this first occurrence since April 2014. Earlier this week, when yields reached an unprecedented height of 0.605% since June of that same year, the BOJ made a similar unscheduled purchase.
As it stands now, there is a slight increase in benchmark yield resting at about one basis point higher at around 0.635%. Throughout this week, both investors and BOJ have been engaged in what could be described as a strategic game; gauging how fast or slow the ascension rate for these yields should be.
The Central Bank took an unconventional move last Friday when they decided not only to maintain their official cap under their yield curve control (YCC) strategy, while also doubling their regular purchasing operations' cap from 0.5% to 1%.
Sumitomo Mitsui DS Asset Management’s Chief Macro Strategist Masayuki Kichikawa opined that while flexibility has increased regarding YCC framework due largely to global uncertainties especially surrounding US economy and interest rates, efforts are being made by BOJ to keep movements gradual in case of market volatility.
Investors and analysts anticipated that fixed-rate buying operations would see increased purchases from BOJ come Wednesday so leaving them unchanged signals potential further growth opportunities for yields.
Elsewhere across different JGB tenures which had touched renewed multi-month highs earlier today saw eased levels later during trading hours.