BoJ may be on course to sell JGBs

The sharp fall in JGB yields in recent weeks means that the Bank of Japan will probably lower its JGB purchases more quickly than we had anticipated. In fact, there’s a chance that the Bank may soon have to sell rather than buy JGBs in order to defend its yield target. While that would be seen as a sign of tighter monetary policy elsewhere, it would merely underline the Bank’s commitment to its yield target in the face of changing market conditions.