The Bank of Japan maintained the benchmark interest rate at a historical low of -0.1%, and maintained the 10-year government bond yield target near 0%. At the same time, it raised the target upper limit for government bond yields from 0.25% to 0.5%, and said it would review the operation of yield curve control. The yen strengthened in the short term , and the United States and Japan fell more than 300 points, once falling below 134. The Nikkei 225 index fell 3.00% during the day.
Japan’s 10-year government bond yield surged 20.5 basis points to 0.455%, the highest level since 2015. Trading in Japanese bond futures on the Osaka Exchange was suspended.
The unexpected turn of the Bank of Japan may have a significant impact on the global market. It will set off a wave of cross-asset financing transactions around the world, and there will be a wave of rise in bond yields. Japanese investors are one of the largest owners of foreign financial assets and will soon face the impetus for funds to flow back into Japan. There may be further capital outflows from the U.S. bond market. As the global financial situation tightens, the cash flow discount rate is likely to increase in the future.
Japan’s years of deflation have finally turned into inflation, which is only 3.7%. The Bank of Japan has just announced that it will set the 10-year government bond yield to 0.5%, which was previously 0.25%. This means that the Bank of Japan is also shrinking liquidity. The yen instantly appreciated, the Japanese stock market fell, and led to the decline of global stock markets. The Bank of Japan has not changed at all in the past decades, it has always turned suddenly,
