Policy Shift Speculations Rile Japan’s Currency and Bond Markets

Speculations of Japan’s momentary policy changes push up the nation’s currency and yields, which in turn triggers its central bank’s unlimited bond buying offer on Monday.

The current policy of the Bank of Japan (BOJ) includes maintaining its short-term policy interest rate at negative levels, which has kept the 10-year yields near zero. Reports of possible tweaks in monetary easing measures to be made by the BOJ spurred a six basis point surge (sharpest increase in two years) in the Japanese 10-year government bond yields and pushed the yen to a two-week high against the U.S. dollar.

In an attempt to apparently stem the tide, the BOJ announced an offer to buy unlimited bonds on Monday. The 10-year yield slid following the announcement, but only to bounce back to just one basis point short of the day’s peak.

BOJ is scheduled to hold its next monetary policy meeting on July 30 and 31.  

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Sergey Savastiouk|Expert

Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.