Spot The Intervention (Bank Of Japan Edition)

We warned earlier "the market would test the BoJ," and sure enough Kuroda and his 'lost boys' answered the market's question by intervening aggressively (offering to buy an unlimited amount of bonds) to rescue what was a rapidly escalating collapse in Japanese government bonds.

As Bloomberg reports, The Bank of Japan offered to buy an unlimited amount of bonds at a fixed rate in an unscheduled operation to reassert control over surging yields. The yen and yield for 10-year debt fell.

The central bank will buy five-to-10 year securities from the secondary market, it said in a statement Friday. It’s offering to buy the benchmark 10-year notes at 0.110 percent, it said.

 

The move comes after an earlier attempt Friday morning to cap yields by expanding bond purchases in a regular operation failed. 

 

Governor Haruhiko Kuroda on Tuesday recommitted to his strategy to hold 10-year debt yield at around zero percent even as accelerating inflation and an improving outlook for some of the world’s biggest economies push up bond yields globally.

The reaction is self-evident...

 

And USDJPY spiked...

 

It would appear Governor Kuroda has shown his hand one too many times (after November's first operation - which failed to garner any bids).