Bond Market `Exhausted' as Kuroda's Stimulus Enters Fourth Year
- Low yields accompanied by high volatility, money market stress
- `The BOJ is running out of bullets': Credit Agricole's Ogata
Haruhiko Kuroda.
Photographer: Akio Kon/BloombergThis article is for subscribers only.
Three years since Bank of Japan Governor Haruhiko Kuroda embarked on an unprecedented monetary experiment, yields continue to test new lows even as concern grows that his policies will cripple the world’s second-biggest bond market.
Yields have tumbled below zero on maturities up to a decade following the central bank’s surprise decision this year to implement negative interest rates, after unleashing two rounds of quantitative easing since April 4, 2013. As the BOJ’s bond holdings have swelled to one-third of total debt outstanding, the market has begun to seize up amid a dearth of liquidity, causing volatility to soar. Even so, inflation -- and inflationary expectations -- remain far from Kuroda’s 2 percent target.