BOJ owned half of outstanding Japan gov't bonds for 1st time

The Bank of Japan held more than half of outstanding government bonds for the first time at the end of September, after stepping up purchases to keep bond yields low even as its counterparts began raising interest rates, data showed Monday.

The BOJ owned 536 trillion yen ($4 trillion) worth, or 50.26 percent, of Japanese government bonds, which stood at 1,066 trillion yen. The Japanese central bank has been offering to buy unlimited amounts of 10-year bonds to prevent the benchmark yield from rising above its 0.25 percent cap, as overseas yields continue to rise.

The gobbling up of government bonds has depressed borrowing costs for businesses and households, but the BOJ's swelling balance sheet will pose a challenge if it decides to explore an exit. The central bank appears in no hurry to tweak its monetary easing policy at present.

In the six months to September, the BOJ booked an unrealized loss of 874.9 billion yen on its government bond holdings, the first under Governor Haruhiko Kuroda, after bond prices fell amid global monetary tightening. Bond prices move inversely to yields.

The BOJ data also showed Japanese household assets totaled 2,005 trillion yen, up 0.8 percent from a year earlier. The figure remained above the 2,000 threshold for four quarters as many preferred to keep cash on hand and consumption remained sluggish, a trend that has been in place amid the COVID-19 pandemic.

Japanese Prime Minister Fumio Kishida is seeking to boost households' income from financial assets by encouraging them to put more cash to work by investing in riskier assets such as stocks and investment trusts.

Assets held in cash and deposits accounted for nearly 55 percent of total household assets, rising 2.5 percent to 1,100 trillion yen. Other asset types, such as stocks and investment trusts declined. Securities dropped 8.1 percent to 196 trillion yen and investment trusts were down 1.7 percent at 86 trillion yen.

© Kyodo News