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


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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