TechnoMeter

Traders around the world on Tuesday woke up to a surprise BoJ development that may seem small on absolute terms, but could lead to a broader shift in their Quantitative & Qualitative Easing Program (QQE.)



The Japanese Yen, which has been the last currency whose central bank in the G4 is limiting discussions on when they will remove their easing program to support the economy notified markets that they were reducing their purchases of super-long bonds, which caused rate prices to drop and yields to jump. This may be a far cry from a taper announcement, but given that the bond bull market has been supported by fewer central bank buyers, another central bank pulling back could be cause for natural concern.

The Bank of Japan’s surprise statement that they will not buy as many long-end bonds as they had been caused investors to be cautious on US notes too. The action sent the US 10Yr note (IG CFD: US 10-Year T-Note) yield to a nine-month high at 2.53% as the inversely related price fell to a nine-month low.

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