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Japan's long-term rates fall again, negating BOJ actions

Downturn in US yields combines with shrinking pool of bonds

A shrinking pool of Japanese government bonds available for trading has constrained the central bank's bond-buying program. (Photo by Takaki Kashiwabara)

TOKYO -- Long-term interest rates in Japan have sunk to levels not seen since before the central bank tweaked its monetary easing policy in July, tracking the descent in U.S. Treasury yields in recent weeks.

A shrinking pool of Japanese government bonds available for trading in the secondary market -- a consequence of the Bank of Japan's massive purchases of these bonds -- is also contributing to the downward trend and is sapping the ammunition needed for the bank to combat deflationary pressures.

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