Japan To Cut Super-Long Bond Sales To Calm Markets

Japan plans to reduce sales of super-long bonds by about 10% from its original target in a rare revision to its fiscal-year bond program, trimming overall bond issuance to ease market concerns, according to a draft document seen by Takaya Yamaguchi of Reuters.

The move follows the Bank of Japan’s recent decision to slow the tapering of bond purchases starting next fiscal year, signaling a cautious exit from its decade-long monetary stimulus program.

The move is intended to calm fears of oversupply following weak demand at recent auctions and a sharp spike in super-long yields, which reached record highs last month.

It also follows the Bank of Japan’s recent decision to slow the tapering of bond purchases starting next fiscal year, signaling a cautious exit from its decade-long monetary stimulus program.

The revised plan will be presented to primary dealers for discussion at a meeting on Friday. There are also proposals to buy back previously issued super-long Japanese Government Bonds (JGBs) with low interest rates, in order to better balance supply and demand.

The planned reduction in 20-, 30-, and 40-year bond sales would be partially offset by increased issuance of shorter-term notes and retail-oriented bonds specifically designed for households.