It's now clear why Japanese bond yields have been falling
The market is front-running the BOJ
Japanese yields have been tumbling for the past week, hitting successive record lows.
We now have a better idea why.
The Bank of Japan probably won't do anything today but they're saving ammunition in case of a Brexit. The Nikkei Asian Review reports that the BOJ has plans to buy bonds on 10 days in June. So far, they've only bought bonds on four.
"Filling the remaining six or so slots could take almost every weekday for the rest of the month when the BOJ is not meeting on monetary policy and the Finance Ministry is not auctioning bonds," they report.
The theory is that the BOJ is holding back ammunition for the Brexit vote. They want to be able to buy everything if the 'leave' side wins.
At the same time, there's always the chance the BOJ announces more action later today (although that's slim chance).
Either way, buying bonds now and dumping them on the BOJ later in the month is a winning strategy.
I mean, who would buy bonds with a -0.17% yield unless they knew there was someone who would buy them at -0.20%?