At its scheduled monetary policy meeting on Tuesday, the Bank of Japan (BoJ), which, unlike other major central banks, continues to pursue a highly accommodative monetary policy, left interest rates unchanged but decided without prior warning to partially loosen controls. . the structure of the government bond yield curve. Specifically, he widened the range of long-term yields from 25 basis points to 50 basis points (bp), a decision that surprised markets as they did not expect a change in BOJ policy before Governor Haruhiko Kuroda’s term expired at the end of March 2023. The Governor indicated in his speech that the decision is intended to improve the functioning of the bond market, and that the bank intends to continue its supportive monetary policy by announcing an increase in monthly bond purchases from $7.3 trillion. to 9 trillion yen, markets saw this as the first step towards tightening monetary policy.

As a result, Japan’s 10-year bond yield hit its highest level in about seven years (0.48%), forcing international fixed income markets, still reeling from last week’s Fed and ECB announcements, to continue aggressive monetary policy. . politics. Notably, the US 10-year yield was above 3.70% for the first time since the end of last month before temporarily retreating on Thursday by about 9 basis points, but remained above 3.50% where it was only last week. , following the release of US inflation data showing a further decline in headline and core CPI in November (to 7.1% and 6.0% y/y, respectively). Despite some gains in U.S. government bonds at the end of the week and reports that the German PPI fell for the second consecutive month in November (28.8% y/y, a nine-month low), European bonds remained under pressure, with the German PPI Yields on 10-year bonds topped 2.30% for the first time in six weeks on the back of fresh “aggressive” statements from ECB officials about a further 50 basis point rate hike.

* Department of Financial Analysis and Research of International Capital Markets of Eurobank.