Japan’s benchmark bond yield breached the central bank’s new ceiling, with traders positioning for more changes to its yield-curve control policy next week.
The 10-year yield rose as much as four basis points to 0.54%, a day after the Yomiuri newspaper said the central bank will consider policy adjustments to counter turbulence caused by last month’s tweak. The benchmark yield pared its rise after the Bank of Japan announced a second round of unscheduled debt purchases.
Traders are ramping up bets that the BOJ will exit its ultradovish settings as inflation accelerates, after doggedly clinging to the policy even as major counterparts tightened. Citigroup now expects the central bank to terminate its yield curve control next week, and hedge funds are shorting sovereign bonds.