Bonds sell-off gains momentum, Intel gains 8% pre-market
Bonds around the world extended a retreat as the Bank of Japan, so far a holdout on ultra-loose monetary policy, surprised investors by loosening its grip on yields.
The move sent Japan’s 10-year yield to the highest level since 2014, triggered big swings in the yen and sparked a debate over whether the country is starting to normalize policy.
US and European bond markets tumbled on speculation that higher yields in Japan may lead investor to repatriate cash home. Japanese investors are the biggest foreign holders of US government debt and own sizable amounts of European and Australian bonds.
Treasury 10-year yields were flat at 4%, having risen 13 basis points the previous day. The equivalent rate in Germany increased 5 basis points, and Australia’s climbed as much as 20 basis points.
“This is a big week as it signals we are pretty much at the end of hiking cycles globally,” said Peter Kinsella, head of currency strategy at asset manager Union Bancaire Privee UBP SA.
The “BOJ is effectively saying the top of the yield range is now 1% so that implies 50 basis points in potential steepening. So it’s slow gradual normalization, but yes, it’s normalization BOJ style,” he added.
US shares took a knock towards close on Thursday when the Nikkei news agency reported the BOJ would discuss tweaks to yield-curve control at its meeting. The bank followed through at its Friday meeting, saying it would show more flexibility over its yield curve control policy.
Japan’s 10-year yields jumped as much as 13.5 basis points to 0.575% after the decision, above the BOJ’s earlier cap of 0.5%.
The yen strengthened as much as 1% against the dollar, but ceded some of its gains as the session wore on. The currency is still headed for its
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