Looking ahead, with yields on benchmark 10-year Japanese government bonds now back to 0% and rising, the Bank of Japan could even expand on its quantitative easing program to maintain its 0% target, Robert Bush, ETF Strategist at Deutsche Asset Management, told ETF Trends.

“The BOJ has to buy more JGBs to keep yields down, and they may even buy more than originally planned and increase more QE or flood yen to the market,” Bush said.

The BOJ on Thursday stated that it plans to buy an unlimited amount of Japanese government bonds at fixed rates for the first time since the introduction of its policy framework, signalling its commitment to fight rising yields, reports Megumi Fujikawa for the Wall Street Journal.

Global yields have jumped on expectations that the presidency of Donald Trump would fuel inflation and growth. However, the BOJ could step in to keep the recent spike from getting out of hand.

“Interest rates may have risen in the U.S., but that doesn’t mean that we have to automatically allow Japanese interest rates to increase in tandem,” Bank of Japan Gov. Haruhiko Kuroda said.

For more information on the Japanese market, visit our Japan category.

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