Core Viewpoint - The market anticipates that the Bank of Japan will maintain its current policy interest rate at 0.5% this week, with a focus on potential adjustments to its bond purchasing plan [1] Group 1: Monetary Policy - The Bank of Japan is expected to continue reducing its government bond purchases at a pace of 400 billion yen per quarter until March 2026 [1] - After the end of the Yield Curve Control (YCC) policy, the Bank of Japan's Governor Kazuo Ueda indicated that government bond yields should be determined by the market [1] Group 2: Future Projections - Morgan Stanley predicts that after March 2026, the Bank of Japan may slow the reduction pace to 200 billion yen per quarter and gradually decrease monthly bond purchases to approximately 2.1 trillion yen by March 2027, potentially halting further reductions thereafter [1]

Group 1 - The Japanese 20-year government bond auction experienced its worst results since 2012, with a bid-to-cover ratio dropping to 2.5 times and tail spreads reaching the highest level since 1987, indicating a significant decline in market demand [1][2] - The yield on long-term Japanese government bonds has risen sharply, with the 10-year, 20-year, 30-year, and 40-year bonds yielding 1.573%, 2.566%, 2.999%, and 3.336% respectively, reflecting increases of approximately 0.28, 0.34, 0.35, and 0.39 percentage points since the beginning of the month [1][2] - Japan's government debt stands at over 230% of GDP, the highest in the world, raising concerns about the country's fiscal health compared to Greece, which has a debt-to-GDP ratio of about 150% [3] Group 2 - The Bank of Japan's (BOJ) introduction of yield curve control (YCC) in 2016 has led to the central bank becoming the largest holder of Japanese government bonds, which has implications for market dynamics and pricing [3][4] - The BOJ's decision to end the negative interest rate policy and begin reducing its bond purchases has contributed to a lack of demand for Japanese bonds, leading to a "buyer strike" in the market [4][6] - Analysts suggest that the current situation in the Japanese bond market may reflect broader global liquidity tightening, with potential spillover effects on U.S. financial markets [5][6]