Technical Analysis

BOJ still at the limit for now


I would expect the test of the upper limit in 10-year Japanese government bond yields to continue for a while, much like when the level was seen at 0.25% previously before the BOJ tweak last month.

The central bank expressed worries about distortions in the market i.e. a lack of functionality if yields are seen veering too far away from where the market believes it should be. However, a continued test of 0.50% would not be too much of a difference as it forces another relentless defense from the BOJ – perhaps hinting at the so-called distortion again.

Just something to watch out for in the weeks/months ahead before any potential BOJ tweaks again.

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