The Bank of Japan (BOJ) is struggling to control rising yields in the market, even though they have a near-monopoly in the market. Despite their efforts to limit higher yields, the current economic climate is making it difficult for them to swim against the current. Today, 10-year Treasury yields have reached 4.85%, causing a sell-off in global bonds.
The BOJ does not want yields to rise too quickly to their 1% threshold. However, if the selling in broader markets continues, they may have to deal with this sooner rather than later. The BOJ’s attempt to limit the surge in yields is facing significant challenges, with the increasing rates potentially surpassing their desired level.
This shift in the market is causing concern for the BOJ as they navigate the delicate balance of controlling yields. If they are unable to effectively manage the rising rates, it could have wider implications for the global bond market. The situation highlights the challenges faced by central banks in their efforts to shape interest rates and control market movements.
