The Bank of Japan offered to buy Japanase government bonds worth of US$9.5 billion. The government bonds had residual maturities from 1 to 10 years. This bond buying activity was part of the bank's radical monetary easing steps in an effor to bring out the third largest world economy out of deflation.

As a result, the prices of government bonds on Wednesday slightly declined. The 10-year government bonds, although going as high as 142.40, was flat at 142.28 at the end of the day.

For their part, traders were quick to take advantage of the Bank of Japan's bond buying spree, as they eagerly offloaded some of their inventory.

According to Naomi Muguruma of Mitsubishi UFJ Morgan Stanley Securities, "The BOJ operation was not a surprise. The demand among traders to reduce inventories outweighs the effectiveness of the BOJ operation."

Japanese government bonds recently stabilized from the volatility caused after the Bank of Japan's promised injection of US$1.4 trillion in less than two years.