Japan Bonds Signal Ueda-Led BOJ May Keep Negative-Rate Policy

While bond investors are betting that the Bank of Japan will tweak its much-debated yield-curve control policy, they still see new Governor Kazuo Ueda sticking with negative rates for now.

Yield on the benchmark two-year government note has fallen since mid-January, while the 10-year yield has stayed around the BOJ’s 0.5% policy ceiling. The moves “may be signaling growing speculation that the BOJ will tweak yield-curve control further but is less likely to lift the negative-rate policy,” Keisuke Tsuruta, a bond strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo, wrote in a research note.