The Bank of Japan may use fixed interest rate operations to reverse the trend of Japanese government bonds

An unscheduled bond-buying operation by the Bank of Japan could end speculation about Japan's tightening of monetary policy, Masaki Kondo, a foreign exchange and interest rate strategist in Tokyo, said on February 7. After a sharp sell-off in JGBs last Friday, it is increasingly likely that the Bank of Japan will buy government bonds. Markets have been testing the BOJ's resolve to defend its yield-curve control policy, with the 10-year bond yield rising to 0.20% last week, just 5 basis points from the top of the BOJ's policy band. The Bank of Japan is likely to announce an unscheduled operation at 10:10 a.m. Tokyo time (9:10 a.m. GMT) on Monday, which could be a standard buy or a less-used fixed-rate operation. The Bank of Japan could do so for several days, which should be enough to reverse bearish sentiment on Japanese bonds.