Kuroda’s Wider Yield Band Faces Immediate Inflation Test
- CPI data due Friday is forecast to show inflation quickened
- Yields have surged toward BOJ’s new 10-year ceiling of 0.5%
Haruhiko Kuroda
Photographer: Ting Shen/BloombergThis article is for subscribers only.
The Bank of Japan responded to market pressure this week by unexpectedly increasing its band for the 10-year bond yield. The new ceiling is already coming under threat.
The benchmark yield jumped to as high as 0.48% Wednesday, the day after the BOJ doubled the top of its allowable range to 0.5%. Similar-maturity swap rates have increased to 0.74%, indicating traders are anticipating yields will break above that level. One immediate trigger may be Friday’s inflation data.