TOKYO : Japanese government bond yields held at the top of the central bank's policy band on Wednesday and bond futures saw their biggest fall in years as traders bet on tweaks to loose monetary settings, despite the Bank of Japan's offer of unlimited bond purchases.
Traders say speculators betting the BOJ would need to capitulate on its ultra-easy policy amid pressures from tightening at other global central banks have been attacking futures along with parts of the cash bond curve, including the seven-year note. The BOJ meets on Friday and is widely expected to stick to its yield-curve-control policy, even as global markets sell off violently ahead of a Fed meeting on Wednesday at which bank analysts expect as much as 75 basis points of tightening.
"While there certainly has been some profit in shorting the very long end of the curve, both historically and in recent months, taking on the firepower of the Bank of Japan, especially as it is led by the very strong-willed Governor Kuroda, will not likely end well."
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