BoJ Offers To Buy Unlimited Debt, Boosts POMO In Panic Response To Surging Rates

Kuroda is losing kontrol

After unexpectedly boosting its bond-buying in the 3-5Y segment of the JGB curve on Tuesday, as global bond yields break ever higher, it appears The Bank of Japan is realizing it is losing control of its yield curve and today unleashed a double-whammy to stifle the bond bears...

Whammy 1 - BoJ offers to buy unlimited 10Y notes at 11bps.

Result - a 0.5bps drop in the JGB yield!!

Let's hold back on the 'mission accomplished' celebration for now, because in a rerun of the failed attempt from Tuesday, when the BOJ boosted its 3-to-5 year bond purchase operation (aka POMO) from 300BN to 330BN yen, today it proceeded with...

Whammy 2 - BoJ increasese its usual POMO to 450 billion yen from 410 billion in the 5Y and 10Y range of the curve.

Result: a very brief weakening of the JPY followed by a 'policy error-like' drop in USDJPY as the Yen spiked now that the market demands even more.

This is not the result Kuroda and his cronies were hoping for.

As Barclays' rates strategist predicted, similar operations are likely in future if yields rise, warning that while the BOJ’s action can offer some relief to markets but the real cause of yield rise is higher U.S. yields, where prospects are unclear.

He is right, because the USDJPY is already back to unchanged. If and when the 10Y resumes blowing out, the BOJ will be forced to get even more aggressively involved as the spillover effects from rising US yields are finally appreciated by the rest of the world. 

But the last words belong to Yasutoshi Nagai, chief economist at Daiwa Securities, who said that "it’s a clear message from the Bank of Japan,” after the central bank announced a fixed-rate bond purchasing operation and offered to buy more of 5-to-10 year bonds at their regular operation Friday.

"The message is they’ll absolutely make sure that long-term yields don’t go above 0.11 percent."

And the punchline: "Right now the BOJ is nearing major personnel changes, so it doesn’t want the market to disintegrate."

And that, ladies and gents, is your price stability.

Comments

ebworthen zorba THE GREEK Thu, 02/01/2018 - 21:02 Permalink

Laughing like a hyena - because he is crazy, an insane economic alchemist.

Like all Central Banksters he believes that printing money has no moral hazard involved, and that people will always:  get up, go to work, and pay their taxes while their life is pulled out from under them.

When you reduce people's labor or life to zero - eventually they grab hold of you and hang you from the nearest tree, drive a pike through your heart, or lop off your head with a guillotine.

In reply to by zorba THE GREEK

Thebighouse Thu, 02/01/2018 - 20:48 Permalink

I think Soros and Bezos are involved with trying to trip up the Don......they probably ran the market higher and not are selling the 

Ten year....ugh.....must be clinton liquidating her haitian holdings.

Stormtrooper Thu, 02/01/2018 - 20:48 Permalink

Wrong approach.  Kuroda should offer to buy unlimited US Treasuries at low interest rates so that he can control the source of the problem.  Ctrl-P.  Investors will take Yen funny money as well as any other.

CRM114 Thu, 02/01/2018 - 20:54 Permalink

Losing control?

On what basis do you assume he ever had control?

And the Fed for that matter.

Sitting in the drivers seat waving the wheel around is what keeps kids happy in the fancy supermarket carts...but the steering wheel is not connected to the cart wheels.

Yen Cross Thu, 02/01/2018 - 20:56 Permalink

  You gals and guys really need to turn Tucker Carlson on. He's getting ready to eat some Keynesian Libtard  liver.

  I apologize,Tucker just tossed the baton to Hannity.

NoDebt Thu, 02/01/2018 - 20:58 Permalink

When a rise of 3 bps (3/100 of one percent) is what makes or breaks you, you're totally fucked.

Look at the top chart.  The yield ranges from low to high, 7 to 10 bps.

 

Anonymous (not verified) Don Sunset Thu, 02/01/2018 - 21:14 Permalink

A Japanese economic meltdown has been in the cards for years ... but when is the question?

My guess? - if TPTB are pulling the plug, there must be a good reason for this and some false flag or war to cover it up.

So, this might just be a little "shimbly" in the system ... perhaps clears itself up in a week ...

(like VD after a course of antibiotics ...)

In reply to by Don Sunset

mosfet Thu, 02/01/2018 - 22:05 Permalink

Once Japan enters hyper inflation and her people start panicking into crypto, pm's and real estate, you can thank Kuroda for this no-holds barred approach to unlimited debt creation.  Be warned though that (for now) Gold currently trades lower as the Yen inflates - so expect some bargains before the dam breaks.

Yen Cross Thu, 02/01/2018 - 22:30 Permalink

 Kuroda is such a " carnival- barker".  That guy is such a hoot...  He could have won WWII for Japan.  I shit you not?

 I thought Mervyn [ the swerve] King > ex Bank'o Britain .Governer held the "PT Barnum  bankster seat"  ?

  I need to adjust my portfolio~ lol

honestann Thu, 02/01/2018 - 22:59 Permalink

Hahaha.  I can't help myself.

Do they mean real people are actually willing to lend money for 10 or 30 years at 0.11% interest?

Seriously?

What a stark raving insane lunatic world we live in.  Beyond psycho.

rex-lacrymarum honestann Fri, 02/02/2018 - 03:31 Permalink

This is probably no longer the way to look at it... rather, it is all speculation on prices, as the convexity effect transforms even small changes in yields into large price moves. And then there is also a captive audience, financial institution that have to hold these bonds in inventory for use as repo collateral for example. 

Obviously this does not alter the conclusion one bit - it is indeed a stark raving insane world. 

In reply to by honestann

turkey george palmer Fri, 02/02/2018 - 03:27 Permalink

No matter how well you think you understand something that you know is happening but is so surreal that you stop and go down the list to just try to get yourself to believe what you are hearing

 1 Japan exports value added products to pay for the nation's expenses.

 2 there isn't enough income to make everyone secure and provide income to the investor class and government so they issue debt

They then buy the debt in such quantity that interest rates are near zero.

The investor class and economic.ists are trying to raise inflation which will destroy the value of the debt and make everyone poorer.

But they can't raise inflation because they have a savings rate through the roof because everyone is trying not to go broke in old age since there is no social security and interest rates are near zero.