Japan Bonds Face Liquidity Stress as BOJ Walks Lonely Rates Path
- Bid-ask spreads have widened to 6-month high across all tenors
- BOJ is set to announce policy decision one day after Fed
Bank of Japan headquarters in Tokyo.
Photographer: Toru Hanai/BloombergThis article is for subscribers only.
The Bank of Japan’s insistence on rock-bottom interest rates even in the face of quickening local inflation is adding to liquidity stress in the world’s second-biggest sovereign debt market.
Bid-ask spreads for the nation’s government bonds have expanded the widest levels since at least March in various tenors, according to data compiled by Bloomberg. Liquidity is also drying up as traders await a BOJ policy decision on Thursday, which will follow an expected interest-rate hike from the Federal Reserve on Wednesday.