• Investors were readying for a Bank of Japan decision Wednesday that could potentially send tremors across global markets, especially if it backs away from its yield- curve-control policy.
  • While economists are near unanimous in expecting the BOJ will maintain its policy and so-called YCC, their conviction has been waning since the central bank’s surprise move in December to raise its yield cap.
  • Some strategists have warned that a shock move higher in Japanese yields could turbocharge a yen rebound and trigger a selloff in global bonds as a wave of money flowed back toward Japan out of foreign holdings like Treasuries.
  • Japan’s bond market has been battling against the yield band ever since it was implemented in 2016, with the challenge intensifying in recent days.
  • The yen has been rallying since October, reaching the strongest since May on Friday, on bets that an end to YCC will narrow Japan’s yield differential with other major economies.