I've posted on this before, the reduction in Bank of Japan JGB purchases as the bank switches from a target amount to controlling the yield curve
Via HSBC (bolding mine):
- The Bank of Japan, like Sesame Street's cookie monster, has seemingly gobbled up most of the government bonds it can, in an effort to pull the economy out of deflation.
- The BoJ still owns about 40% of the market but, with many investors needing to maintain minimum holdings, the pool of bonds available for purchase by the central bank is fading fast.
- Does that put the BoJ's aggressive monetary easing at risk? We do not think so. What really matters now is the BoJ's commitment to keep 10-year yields around 0%. Its intention to net-purchase around JPY80trn of JGBs annually is less important.
- In fact, the BoJ has already started to taper its purchases, with the pace falling to an annual rate of JPY44trn in July.
- However, amid declining liquidity and a diminishing stock of "for sale" bonds, a slower purchase pace does not impair the BoJ's ability to keep the 10-year yield at around 0% (or wherever it chooses).
- It also does not meaningfully reduce the monetary impulse from the easing stance.
- Market expectations will be critical. Any loss of confidence in the commitment to structural reforms and monetary policy would quickly render easing ineffective.
The note goes on, but that's it in a nutshell.
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As I said above, I've posted on this before, here (great work from Credit Agricole):
- the quantity of money (JGB purchases or monetary base) has already become an endogenous variable rather than a policy variable under the yield curve control scheme.
- We currently expect the "JPY80trln" language to be dropped at the October or December MPM
- However, we emphasize that it represents no policy changes ... Quantity is no longer a policy variable as confirmed by fixed-rate JGB purchases Under the present monetary policy settings, the main policy tools are nominal interest rates while the quantity of money no longer serves the role
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There will, at some stage, be an announcement from the Bank of Japan about them reducing the 80tln yen target (for JGB buys), if you are familiar with this before it happens you'll be prepared. There will be plenty of histrionics about 'tapering' and 'tightening' - but you'll see through this for what it actually is.
I would have suspected this guy will replace Kuroda as head of the BOJ in April (2018), but given Yellen will be replaced in February his services will get snapped up by the Fed.