#centralbanks are once again on the news. #boj announced today, unexpectedly, they are widening the yield band for its 10 year JGB. If you recall, they have implemented a Yield curve control policy whereby the government and the bank of Japan will defend a ceiling of 0.25% yield for the 10 year government bond. That’s why the #yen depreciated from 115 to 150 vs the #dollar YTD. As you can see in the chart below, the band has been widened from 0.25% to 0.50%, and the reason seems to be inflation. In an interconnected and leveraged world, this may have huge implications on currencies - the yen has already strengthen to 132 from 137 - and other government bonds.
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Source: Bianco Research
