Global Bond Markets Shackled to Japan by Kuroda’s 0% Crusade
- BOJ spurs decline in bond volatility, surge in correlations
- Mizuho Asset says yields across bond markets may all converge
How Important Is BOJ Policy for the Global Economy?
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Haruhiko Kuroda might have set his sights on Japan, but his latest move is turning out to have far-reaching consequences for bond markets all over the world.
Almost two weeks ago, the Bank of Japan governor unveiled a plan to anchor yields on 10-year bonds at around zero, after trillions of yen of quantitative easing and the introduction of negative interest rates failed to revive the economy. While the shift was ostensibly aimed at helping the financial industry and quashing deflation, investors far and wide responded by pushing yields lower. From Japan to the U.S. and Europe, volatility all but vanished and correlations rose to levels rarely seen in the past.