Japanese government bond yields tumbled, falling the most in two decades at one point on Wednesday, as they retreated sharply from the central bank's 0.5% ceiling after policymakers decided to keep yield curve controls in place.
The 10-year yield plunged as much as 14 basis points to 0.36% at its lowest point, which would have been the biggest one-day decline since September 2003, before edging back up to stand at 0.41% as of 0546 GMT. The yield was at 0.51% prior to the Bank of Japan decision.
Ten-year JGB futures jumped when they resumed trading following the midday break, trading up as much as 1.81 points to 146.65, the highest since Dec. 20. They had dipped to 144.15 on Friday, the lowest since March 2014. The yen retreated as much as 2.6% to 131.58 per dollar on Wednesday, reversing a rally that was driven by bets BOJ stimulus was on the way out, which had pushed Japan's currency to its highest since May. The decline was the biggest one-day drop since the onset of the COVID pandemic in March 2020.surged 2.36%, on course for its best day in more than two months.
The 10-year yield has breached the BOJ's ceiling in each of the past three trading sessions, only to close back at the 0.5% limit each day. On Friday, it spiked to a 7-1/2-year peak of 0.54%.Taming yields has come at a cost, with the central bank splashing an unprecedented 10 trillion yen on bond buying operations on Friday and Monday, calling into question the sustainability of the programme.
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