Bank of Japan dumps JGBs at fastest pace in history

For more than a decade, the Bank of Japan was the buyer of last resort in the world’s second-largest bond market. Now it’s becoming the seller nobody expected to move this fast. The BoJ’s monthly Japanese Government Bond purchases have dropped to 2.9 trillion yen for the January-March 2026 quarter, the lowest level since the central bank launched its quantitative and qualitative easing program back in April 2013. Its total balance sheet has contracted by roughly 94.3 trillion yen, or 12.6%, from the 2024 peak. JGB holdings alone are down more than 10% from recent highs. The unwind playbook The reduction plan traces back to a decision made in July 2024, when the BoJ laid out a structured taper schedule. The playbook called for cutting monthly purchases by approximately 400 billion yen per quarter through the January-March 2026 period, then slowing the pace to 200 billion yen per quarter after that. The target: monthly purchases of around 2 trillion yen by the January-March 2027 quarter. And it’s not just bonds. The central bank has started selling equity ETFs valued at approximately 330 billion yen annually, along with J-REITs at about 5 billion yen per year. Yields are waking up Lo...