Bank of Japan Cuts Assets by ¥116.9 Trillion as QT Drives 30-Year Yield to 4.0%
Updated
Updated · WOLF STREET · Jul 3
Bank of Japan Cuts Assets by ¥116.9 Trillion as QT Drives 30-Year Yield to 4.0%
1 articles · Updated · WOLF STREET · Jul 3
Summary
¥23.5 trillion came off the BOJ balance sheet in the quarter ended June 30, the biggest quarterly drop of its tightening cycle, leaving total assets at ¥639.6 trillion, the lowest since Q1 2020.
Since its Q1 2024 peak, the BOJ has shed ¥116.9 trillion, or 15.6%, using quantitative tightening rather than aggressive rate hikes to support a yen that has fallen about 56% against the dollar since 2012.
JGB holdings fell ¥12.5 trillion in Q2 to ¥518.3 trillion, loans dropped ¥9.7 trillion to ¥68.0 trillion, and the BOJ has already reduced commercial paper and Treasury bills to zero.
The central bank has also begun outright sales of equity ETFs and J-REITs after announcing the move last September, though the reported ¥120 billion sold in Q2 is booked at acquisition cost and understates market-value sales.
That balance-sheet runoff has coincided with a sharp rise in long-term yields—30-year JGBs near 4.0% and 10-year yields at 2.7%—while the BOJ's policy rate remains only 1.0%.