Equity
Japan Equity

BoJ Changes to YCC Is Important

Published on
January 2, 2023
Contributors
RFPnetworks favicon
RFPnetworks editorial
Engagement & analytics
Subscribe

Trends newsletter

Get our insights on what asset manager selectors are reading. Delivered weekly.
Request successful. You will receive confirmation shortly.
Oops! Something went wrong while submitting. Try again.

Whilst necessarily surprising, the Bank of Japan's unexpected decision to raise it's Yield Curve Control (YCC) ceiling is also sufficiently important. In fact, so important that investment managers globally are getting excited about the prospect of a new dawn for Japanese equities and bonds.

But before this excitement spills over into new investor allocations, the question is whether the BoJ allowing 10 year Japanese Government Bonds (JGB's) to trade in an increased range (up from +/25bps to  +/-50bps) versus 0%, is actually a catalytic call to action.

Japan has been fighting deflation for decades. Today the current benchmark rate is set at -0.1% despite inflation hitting a multi decade high in November at 3.8%, well above the BoJ 2% policy target. Yet Japan has also been one of the few countries globally not to have tightened monetary policy in 2022. It should also be noted that Japan is also one of the few countries globally with a Debt/GDP ratio above 200%, of which approximately half is owned by the Bank of Japan.

Put differently, any decision by the BoJ to meaningfully tighten monetary policy at this stage may have less desirable side effects. Neither Governor Kuroda, nor his successor in April 2023, wish to be responsible for extinguishing these early inflationary sparks that could alight a long awaited cytlce of wage inflation, higher consumer expenditure and capex growth.

Nevertheless, as a signal, the widening of the Yield Curve Control ceiling has investment managers and institutional investors seeing amber. Which means they may be changing up a gear in 2023 when it comes to Japanese assets.

Related Investment Trends

Japan Equity

Follow the asset managers and topics that are trending with manager selectors.
Japan Yield Curve Control explanation on RFPnetworks depicted by ornate ceiling in Tokyo.

BoJ Changes to YCC Is Important

The Bank of Japan's unexpected decision to raise it's Yield Curve Control (YCC) ceiling is important. So important that investors are excited.
Read post
Japan Yield Curve Control explanation on RFPnetworks depicted by ornate ceiling in Tokyo.

BoJ Changes to YCC Is Important

The Bank of Japan's unexpected decision to raise it's Yield Curve Control (YCC) ceiling is important. So important that investors are excited.
Read paper
RFPnetworks-Japan-Equity-Research

Less Sceptical About Japanese Equities

Japanese Equities are re-capturing the attention of institutional investors. There are many factors that support the renewed enthusiasm.
Read post
RFPnetworks-Japan-Equity-Research

Less Sceptical About Japanese Equities

Japanese Equities are re-capturing the attention of institutional investors. There are many factors that support the renewed enthusiasm.
Read paper
Capital Group on Japanese Equities on RFPnetworks depicted by colourful shopping street in Osaka City.

Yen's Plummet Puts Bank of Japan in a Bind

The BOJ’s resistance to tighter policy and higher JGB yields is understandable, but this is not a sustainable situation.
Read post
Capital Group on Japanese Equities on RFPnetworks depicted by colourful shopping street in Osaka City.
Capital Group

Yen's Plummet Puts Bank of Japan in a Bind

The BOJ’s resistance to tighter policy and higher JGB yields is understandable, but this is not a sustainable situation.
Read paper
Japanese Equity research on RFPnetworks depicted by a robot

The Case for Japanese Equities

Japanese Equities are gaining momentum with investors. The universe includes global leading companies with strong balance sheets not found elsewhere.
Read post
Japanese Equity research on RFPnetworks depicted by a robot

The Case for Japanese Equities

Japanese Equities are gaining momentum with investors. The universe includes global leading companies with strong balance sheets not found elsewhere.
Read paper
Japanese Equities Research on RFPnetworks depicted by woman preparing tea for visitors

Benefits of Japanese Equities

Japanese Equities have struggled for decades. But the major investor concerns are being addressed and the market is gaining popularity for good reasons.
Read post
Japanese Equities Research on RFPnetworks depicted by woman preparing tea for visitors

Benefits of Japanese Equities

Japanese Equities have struggled for decades. But the major investor concerns are being addressed and the market is gaining popularity for good reasons.
Read paper
Japanese Equity research on RFPnetworks depicted by Japanese man in renaissance costume eating a cake.

Japanese Equities Renaissance

Japanese Equities may be coming back into investors portfolios. Share buybacks are rising and corporate governance is improving at world class companies.
Read post
Japanese Equity research on RFPnetworks depicted by Japanese man in renaissance costume eating a cake.

Japanese Equities Renaissance

Japanese Equities may be coming back into investors portfolios. Share buybacks are rising and corporate governance is improving at world class companies.
Read paper
Japan Equity research on RFPnetworks depicted by street at night in Tokyo full of colourful shop signs.

Japanese Equities and US Yield Curves

Japanese equities are theoretically impacted by the influence of the US Yield Curve on the Yen. But the Bank of Japan knows this and may react accordingly.
Read post
Japan Equity research on RFPnetworks depicted by street at night in Tokyo full of colourful shop signs.

Japanese Equities and US Yield Curves

Japanese equities are theoretically impacted by the influence of the US Yield Curve on the Yen. But the Bank of Japan knows this and may react accordingly.
Read paper
Japan Equity research on RFPnetworks

Japanese Technology Companies and NZE

Japanese Technology companies are gaining the attention of investors looking to transition portfolios to Net Zero Emissions (NZE).
Read post
Japan Equity research on RFPnetworks

Japanese Technology Companies and NZE

Japanese Technology companies are gaining the attention of investors looking to transition portfolios to Net Zero Emissions (NZE).
Read paper

Are you an asset manager selector?

Access 40k+ professional investment research white papers