FX.co ★ BoJ Ueda Warns of Risks from Super-Long Yield Swings

Bank of Japan (BoJ) Governor Kazuo Ueda emphasized on Wednesday the central bank's vigilance regarding the risk that significant fluctuations in super-long bond yields could affect short-term borrowing costs and the broader economic landscape. His remarks underscore the BoJ's growing attention to recent volatility in super-long Japanese Government Bond (JGB) yields, which may influence the upcoming discussions on bond tapering next month. Ueda observed that short- and medium-term rates have a more pronounced effect in Japan due to the nation's household and corporate debt structures. However, he warned that "substantial swings in super-long yields could impact long-term as well as short- and medium-term bond yields." He further stated, "We will closely monitor market developments and their implications for the economy." Ueda also noted the significant uncertainty surrounding U.S. trade policy and its potential repercussions for Japan. Recently, yields on super-long JGBs soared to unprecedented levels amid a global bond sell-off influenced by concerns over worsening fiscal conditions in advanced economies.