What the Bank of Japan is doing is not unprecedented. Rather it is the pace of its asset purchases that is striking. It will do in two years what the Federal Reserve took five years in terms of balance sheet expansion. It will boost its monetary base by around $1.335 trillion by the end of next year. It will be purchasing about 70% of new JGB issuance. The Ministry of Finance issuance and BOJ intended purchases do not appear to align very well and this appears to be impacting the curve and secondary markets. One of the most important issues for the capital markets is the response by the displaced investors. It is ... (full story)