Anticipated actions by the Bank of Japan, such as a rate hike and reduced bond purchases, signal a departure from prolonged monetary stimulus.
The yen's appreciation is attributed to unwinding of carry trades, shrinking yield differentials due to evolving monetary policies, alongside market sell-off adding to its safe-haven status.
Japanese government bond yields are volatile, near yearly highs, amid speculation of BoJ rate increases, creating uncertainty in the market before the upcoming meeting.
Expectations of BoJ policy adjustments are likely to drive continued yen strength, with JGB yields staying elevated, particularly the 10-year yield above 1.05%, reflecting changing monetary dynamics.
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