The global bond-market rally tests Japan’s ability to keep yields down

HARUHIKO KURODA is not a man to be put off by an unexpected setback. On November 17th the governor of the Bank of Japan (BoJ) gave his defiant take on the implications for Japanese monetary policy of the global market gyrations that have followed the surprise election of Donald Trump. Interest rates, he noted, have risen in America. “But that doesn’t mean that we have to automatically allow Japanese interest rates to increase in tandem.”

A sell-off triggered by Mr Trump’s win wiped more than $1.2trn off the value of the world’s bond markets as investors bet that his administration will stoke America’s economic engines and drive up inflation. Bond yields rose sharply around the world as investors sold assets to buy dollar-denominated ones. In Japan the yen weakened and the yield on ten-year government bonds (JGBs) crept above zero for the first time in nearly two months. Since he was appointed by Shinzo Abe, the prime minister, in March 2013 as custodian of the monetary wing of “Abenomics”, Mr Kuroda has been fighting to end years of debilitating deflation. Keeping bond yields down is an important part of that…Continue reading

This post was originally published in the Economist.

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The global bond-market rally tests Japan’s ability to keep yields down

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