Traders Fret Over ‘The Curve’ as Japan Upends World Bond Markets
- Bank of Japan overshadows the Fed ahead of meetings next week
- U.S. rate increases have tended to flatten curve -- until now
Should Bond Traders Brace for Bubble of a Lifetime?
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Speculation that the Japanese central bank is about to undertake a shift in monetary policy is changing the shape of bond markets around the globe.
The difference between short- and long-term yields is widening globally on bets the Bank of Japan’s next monetary twist at its Sept. 20-21 policy meeting will steepen the yield curve. Japan would achieve that by cutting its negative interest rate further, while simultaneously reducing purchases of long-term bonds, according to Morgan Stanley MUFG Securities Co. in Tokyo, one of the nation’s 21 primary dealers.