Just in case anyone thought the recent trend of Japanese ten year bond yields creeping higher was a sign the Bank of Japan was now accepting of a move away from zero, the BoJ made an announcement which made it clear it was not. The BoJ announced it would buy unlimited amounts of 10 year Japanese government bonds (JGB) in the secondary market at a yield of 0.11%. The announcement came after Japanese 10 year yields moved to 0.10% amid a recent rise in bond yields around the world.
It is the BoJ’s second intervention to enforce its (nearly) zero yield policy which was announced in September 2016. In February it announced it would buy unlimited amounts of 10 year JGBs, also at a yield of 0.11%. While its purchases did not force the 10 year bond yield back to zero at the time, the BoJ’s actions reinforced its message to investors and traders; it will not tolerate any meaningful gap between the prevailing market yield and its policy target.