Hidden beneath convulsions in the global bond and currency market is an emerging sense of caution about the possibility that the Bank of Japan may tweak yield curve control policy at the end of July.
Benchmark Japanese bonds are proving resistant to a worldwide rally, sparked by a softening in U.S. price and labor data. Ten-year swap rates, popular with international funds, have climbed well beyond the central bank’s ceiling for equivalent yields.
And positioning in the yen points at further gains for the recently under-pressure currency, even if short-covering carry traders were responsible for igniting its July rebound.