Japanese Government Intervenes Bond Market after 10-Year Yields Hit Decade High

The Bank of Japan turned from stepping-in in the currency market to intervene in the government bond market to control a rise in yields to fresh decade highs on Wednesday, a day after a tweak of its yield curve control policy.

The 10-year Japanese government bond yield rose 2 basis points early Wednesday to 0.97%, which was a level not seen since May 2013. The yield later retreated to 0.95% after the central bank announced an emergency bond-purchase operation.


Yesterday, the Bank of Japan allowed more flexibility in its yield cap, saying that the target level of the 10-year Japanese government bond (JGB) yield will be held at 0%, but will allow the upper bound of 1% “as a reference.”

However, BoJ still maintained its short-term interest rate target at -0.1% and maintained 10-year JGB yield target around 0%.


Meanwhile, the 2-year Japanese government bond rose to 0.162% and the 5-year yield rose to 0.483%, both not seen since 2011.