The Bank of Japan (BOJ) expanded the tolerable band for 10-year JGB yields to ±0.5% from ±0.25%It will also conduct fixed-rate operations at 0.5% every business day when it had previously conducted them at 0.25%. The BOJ said it had decided to widen the tolerable band to enhance the sustainability of monetary easing amid a decline in market functioning in the bond market.

Investors are viewing this as a significant surprise ( USDJPY is down four prominent figures), as most had expected any widening of the tolerable band to be made under the new BOJ leadership in the spring of next year.

From a risk perspective best not to underestimate the lingering impact this could have on broader sentiment because tighter BoJ policy would remove one of the last low-interest rate safe harbours that have helped to keep borrowing costs at low levels. The bond market impact hasn’t been confined there either, with Australian 10yr yields up +19.5bps and those on US 10yr Treasuries up +8.1bps to 3.666%.

The rise in global yields suggests markets are now definitely putting thoughts of a dovish pivot later in 2023 on the back burner, with sovereign bond yields rising globally.

Against this backdrop, investors are trying to find the Central Bank’s endgame, which is proving further bad news for equities, and with the BoJ raising the last low rate anchor, it’s not helping to calm year-end stormy seas.


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If  you thought the FED and ECB were determined to deliver a lump of coal in everyone’s stocks, BoJ Kuroda could be considered the grinch that stole Christmas.

Published by Stephen Innes, Managing Partner, SPI ASSET MANAGEMENT