The Ministry of Finance proposed reducing the additional supply of medium- and long-term government bonds and set the supply amount for October–December at ¥500 billion per month. Most primary dealers reportedly supported the proposal.
At a meeting of special participants in the government bond market, the Ministry of Finance proposed reducing the liquidity supply auctions targeting maturities above 5 years through 11 years. The monthly amount for October–December will be ¥500 billion, a reduction of ¥150 billion per month from the previous quarter.
The proposal calls for the reduction to focus on the zone above 5 years through 11 years, out of the three zones covered by the additional supply framework.
Amounts for maturities above 1 year through 5 years and above 11 years through less than 39 years would remain unchanged under the proposal. Easing supply and demand is also anticipated against the backdrop of the Bank of Japan's successive reductions in purchases, and the view was expressed that scarcity of eligible securities for delivery, or cheapest-to-deliver issues, is easing. The proposal is expected to be formally announced shortly.