TOKYO, Feb. 2 (Xinhua) -- The Bank of Japan (BOJ) in an effort to counter a recent rise in long-term yields launched an emergency bond buying operation on Friday.
The bank's emergency move was to counteract the effects of U.S. Treasury yields continuing to rise and due to recurring speculation that the central bank will soon begin to taper its huge easing measures, in line with other central banks.
Financial institutions opted not, however, to buy bonds offered by the BOJ, with five to 10 years left until maturity, as the asking price was lower than the market price.
When bond prices go up, stocks go down. They, generally speaking, have an inverse relationship as investors choosing between the relative safety and low yield of bonds versus the high risk yet high return potential of stocks have to sell one in order to buy the other.
The announcement of the BOJ's operation alone however served to push the 10-year bond yield from its starting level of 0.095 percent to 0.085 percent, with the yen also retreating against the U.S. dollar following the bank's notice.
The BOJ on Friday also increased its planned purchases of 5 to 10-year bonds from 410 billion yen (3.73 billion U.S. dollars) to to 43000 billion yen (4.10 billion U.S. dollars).
The central bank's regular market operations see the bank usually purchase bonds through auctions.
The move by the BOJ on Friday, however, marked the first fixed-rate buying operation in almost seven months and the first since September 2016 when the program was put into place.
Typically, the bank offers to buy an unlimited amount of government bonds at a set yield from financial institutions.
The central bank's yield curve control policy is aimed at keeping the 10-year government debt yield at around zero percent by adjusting the amount of its bond buying.