Japan: JGB yields jumps to levels around 0.5%, two possible interpretations – Commerzbank
|Economists at Commerzbank explain why JGBs are yielding around 0.50% – and what that tells us about the BoJ.
Born yesterday?
“Because the impression arises that the BoJ’s YCC is changing along the lines of a ‘leaning against the wind’, selling pressure for JGBs does increase. The BoJ has to meet this pressure with increasing levels of JGB purchases. This is the sticking point of the BoJ’s line of argument.”
“Fewer JGB purchases would have only been the result if the BoJ could have illustrated credibly that 0.50% was going to be the limit in perpetuity. As it did not do that, it has now achieved the opposite of what it stated as its motivation. That means there are only two possible interpretations: either its motivation was a different one: the beginning of the end of its ultra-expansionary monetary policy. Or the Japanese central bankers have so little understanding of the market that one has to assume they were born yesterday.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.