The Bank of Japan has made a surprising move by announcing its intention to buy $2.01 billion (300 billion yen) worth of five to 10-year bonds. This decision has had an immediate impact on the 10-year Japanese Government Bond (JGB) yield, which dropped from 0.770% to 0.765% in response.
It is worth noting that Japanese bond yields have experienced an upward trajectory throughout the year. At the beginning of 2023, the yield stood at 0.415%. However, during today’s session, the yield on the 30-year JGB reached its highest point since 2013, peaking at 1.73%.
This recent move by the Bank of Japan is significant due to its prior adjustments to its yield curve control policy in July. The policy change allowed the 10-year JGB yield to reach 1%, which had a substantial impact on global markets.
These developments coincide with the ongoing trend of increasing global bond yields as investors anticipate a prolonged period of higher U.S. interest rates. Consequently, these market movements have put pressure on global equity markets, with the Nikkei 225 index suffering its largest monthly loss of 2023 in September, plummeting by 2.3%, as reported by FactSet.