BoJ yield cap a risky move, says Saxo Bank

Bank of Japan shift drives biggest bond-yield jump in two years

Saxo Bank headquarters
Saxo Bank: the yen remains very weak and could possibly continue to suffer

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The Bank of Japan is running the risk of losing some of its credibility if US yields push above the 3% mark and threaten the sustainability of the central bank’s newly announced cap on Japanese government bond yields, says John Hardy, a strategist at Saxo Bank.

On July 31, governor Haruhiko Kuroda raised the BoJ’s yield cap on 10-year Japanese government bonds (JGBs) to 0.2%, from around 0.1%. This will set up a very interesting situation for the BoJ and the yen

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