Mizuho Bank 1/4: As widely expected #BoJ reduced the volume of #JGB purchases. It cut purchases in the 10~25yr segment to ¥180bn and in the 25yrs+ segment to ¥60bn. Both maturity buckets saw a ¥10bn reduction. Despite the reductions, market was firm & the curve flattened a little
Mizuho Bank 2/4: There was also limited reaction in the currency market, as was the case at the most recent reduction in late June in the 5~10yr bucket. The #BoJ will be pleased that the move has been seen as a technical adjustment rather than a policy-relevant change.
Mizuho Bank 3/4: We continue to believe that as long as yields remain low, it will be possible for the #BoJ to further reduce buying levels without provoking accusations of policy tightening.
Mizuho Bank 4/4: That said, the ¥80trn target becomes ever more redundant. The BoJ expanded its balance sheet by less that ¥50trn in FY17 and the total will likely be lower this fiscal year.
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