Japan’s super-long bond yields continue to surge to record highs | Forexlive

It’s been a bloodbath in the Japanese super-long bond market recently as yields continue to surge to record highs. Yesterday, the BoJ released briefing material used at its meeting with bond market participants and although there were different opinions, lower liquidity and demand for super-long bonds have been cited.

Some market participants urged the BoJ to increase buying of super-long bonds, or terminate tapering for that maturity given the current blowout. Most of them agree that slowing the pace of tapering could alleviate the stress at a time where debts are coming into greater focus. The recent comment from Japanese PM saying that their fiscal state is “worse than Greece” didn’t help for sure.

Some say that these sharp moves could risk contagion and affect global markets as they would encourage Japanese investors to bring cash home.

The BOJ will review its quantitative tightening plan at its next policy meeting on June 16-17. If we start to see some intervention or talks of change in tapering, that could weigh on the JPY.

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