10-year Japanese bond yield breaches upper limit, then falls back

The yield on the benchmark 10-year Japanese government bond briefly rose to a level not seen in over 7-and-a-half years. It hit 0.54 percent on Friday.

That breached a cap recently set under the central bank's monetary policy.

Market sources say many investors sold JGBs on speculation the Bank of Japan may again taper its relatively loose policy.

But the BOJ responded by buying a massive amount of bonds, nudging the yield on the 10-year issue lower. The yield ended the day at its upper limit of half a percent.

The bank decided in its December meeting to allow the yield to move in a range of plus or minus 0.5 percent. The earlier band was plus or minus 0.25 percent.

The BOJ's bond-purchases on Friday marked a single-day record of just over 5 trillion yen, or 39 billion dollars. A wide range of government instruments were bought to tamp down on the upward pressure on yield.

The bank says it will conduct additional purchases on Monday. It's unusual for the BOJ to announce such a special operation beforehand.