As Japan's short-term treasury bond yield approaches the brink of zero, the era of global negative bond yields is coming to an end.
On Monday, Japan's 2-year Treasury bond yield climbed to -0.002%, the first time since 2015, approaching the brink of zero, and reflects the market's increased bets that the Bank of Japan will begin to tighten its policies.
media data shows that the total market value of global negative income bonds has dropped to just above $1 trillion, and all are Japanese short-term treasury bonds . As central banks in various countries introduced stimulus measures to respond to the outbreak, this number reached a peak of more than $18 trillion by the end of 2020.
Therefore, the rise in Japan's short-term government bond yields also marks the end of the era of negative bond yields in the global bonds.
The Bank of Japan will announce its interest rate decision this Friday, and bets on its policy adjustments have increased this month, although most economists believe that the Bank of Japan will continue to stick to the yield curve control policy (YCC).
At the same time, international fund has also increased its bet on the Bank of Japan's turn, which has risen to a level higher than the prevalence of "widow transactions" in June.
data shows that the 10-year yen swap rate preferred by international funds has risen above 0.6%, reaching its highest level in eight years, significantly exceeding the Bank of Japan's 0.25% policy ceiling. This suggests that at least some traders believe that the Japanese government will be forced to abandon the YCC policy to boost the economy.
The Bank of Japan is the last central bank among developed countries to insist on boosting the economy with extremely low interest rates, and its short-term policy interest rate remains at -0.1%. Bank of Japan Governor Kuroda Haruhiko has made it clear that he has no intention to change the policy.
After years of financial crisis, the economy still has no improvement. ECB and the Bank of Japan realize that extreme measures need to be taken to boost the economy, so they began to adopt negative interest rate , with the goal of reducing borrowing costs and preventing lending institutions from hoarding cash.
But the ECB has withdrawn from the negative interest rate range in July, and high inflation now forces Japan to start considering this option: data shows that Japan's CPI (excluding the impact of tax increase) in September increased by 3% year-on-year, higher than the previous value of 2.8%, and is the first time since 1991 . This has heightened doubts about whether Japan needs to continue to implement stimulus measures.
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