10-year JGBs keep calmer after BOJ policy decision

Little reaction in the Japanese bond market


10-year JGB yields are little changed on the day after a bit of a spike on the BOJ policy decision earlier, in which the central bank said it will widen the yields band to +/- 0.25%.
It is also the first time that the central bank made mention to the yields band in its policy statement, so this is now a rather official piece of policy setting in some ways.
That said, 10-year JGB yields are keeping a little higher relative to the start of the week, though not by much. In some sense, the leaked story on this since a week ago may have already given the market plenty of time to prepare itself.
But also, the jump in yields this week owes in some part to the surge in Treasury yields yesterday as well – causing a spillover impact to other bond markets.
In the bigger picture, yields look to be settling into a bit of a range above 0% and the BOJ widening the band to 0.25% is but an acknowledgment of that.
While that could be seen as yen supportive, the fact that the BOJ is still keeping a rather tight lid on yields and their reiteration that YCC is still much needed, means that any major shift in policy thinking may not be as major as one would think.
For the BOJ, sure this can arguably be considered as a massive fine-tuning since they aren’t typically known to even explore any hawkish possibilities.
But when the central bank itself also owns two-thirds of JGBs in the market, it may not be quite as big a change as played out to be perhaps.