Japan’s benchmark 10-year government bond yield briefly touched 1 percent on Wednesday, marking the first occurrence of this level in nearly 11 years. This increase is fueling speculation that the Bank of Japan (BOJ) might be moving away from its longstanding ultraloose monetary policy.
The benchmark yield rose to 1.000 percent at one point, a rise of 0.020 percentage points from Tuesday’s close, reaching the 1 percent mark for the first time since May 2013.
The bond market has been under selling pressure since May 13, following the BOJ’s decision to reduce its regular purchase of Japanese government bonds. This action has intensified speculation about a potential shift towards policy normalization by the central bank.
In its latest operation, the BOJ lowered its purchase amount for bonds maturing in five to 10 years to 425 billion yen ($2.7 billion), down from 475 billion yen in its previous operation on April 24.
This reduction is the first since the BOJ ended its negative interest rate policy and yield cap program in March. These policies had been central to its unconventional monetary easing strategy for about a decade.
It’s important to note that bond yields and prices move inversely to each other.
