THE BANK ABOUT TO RAISE JAPAN'S RATES OWNS 517.7 TRILLION YEN OF THE BONDS IT WILL MARK DOWN — 339 ISSUES, 217 OF THEM TWENTY YEARS AND LONGER — AND IT IS STILL BUYING
Three times a month the Bank of Japan posts a spreadsheet that almost nobody opens. Wednesday's edition carries the holdings as of August 31, one line for every Japanese government bond the central bank owns. Add the column up and it comes to 517.7 trillion yen across 339 separate issues. Nobody printed that number today because you have to open the file to get it.
Here is why it matters this month. The Bank meets on September 17 and 18, the day after the Fed, and the market increasingly expects it to raise rates. When rates go up the price of bonds already issued goes down — an old bond pays a fixed amount, so once new bonds pay more, the old ones are worth less. That is arithmetic, not opinion. Which means the institution that will set the rate is also the largest holder of the paper that gets marked down when it does.
Now look at where the money sits. 227 trillion yen in ten-year bonds. Another 190.7 trillion, spread across 217 of those 339 issues, in bonds of twenty years or longer. That is the far end of the curve, the part that has actually been moving, and it is more than a third of the book. The ten-year yield hit 3.012 percent Wednesday, a level it has not seen since 1996.
And they have not stopped buying. The purchase schedule they updated on the same day still runs about 2.5 trillion yen a month.
Put the three together and the picture is plain enough. They are buying the bonds. They already own more of them than anyone. And they are about to make them worth less. Same institution, same building, same week. The yen sitting in a Japanese worker's account gets no say in any of it, and there is no version of this where the price of money is discovered rather than assigned. Twenty-one million does not hold a meeting. Fundamentalist.
Here is why it matters this month. The Bank meets on September 17 and 18, the day after the Fed, and the market increasingly expects it to raise rates. When rates go up the price of bonds already issued goes down — an old bond pays a fixed amount, so once new bonds pay more, the old ones are worth less. That is arithmetic, not opinion. Which means the institution that will set the rate is also the largest holder of the paper that gets marked down when it does.
Now look at where the money sits. 227 trillion yen in ten-year bonds. Another 190.7 trillion, spread across 217 of those 339 issues, in bonds of twenty years or longer. That is the far end of the curve, the part that has actually been moving, and it is more than a third of the book. The ten-year yield hit 3.012 percent Wednesday, a level it has not seen since 1996.
And they have not stopped buying. The purchase schedule they updated on the same day still runs about 2.5 trillion yen a month.
Put the three together and the picture is plain enough. They are buying the bonds. They already own more of them than anyone. And they are about to make them worth less. Same institution, same building, same week. The yen sitting in a Japanese worker's account gets no say in any of it, and there is no version of this where the price of money is discovered rather than assigned. Twenty-one million does not hold a meeting. Fundamentalist.
BANK OF JAPAN (PRIMARY) · mei260831.xlsx, as of Aug 31, released Wed Sep 2 · totals computed from the file · meeting dates per the BOJ 2026 schedule · + TRADING ECONOMICS Sep 2 on the 10-year at 3.012%