Japan's Ministry of Finance financial bureau head Saito with the remarks:

  • Interest rates remain low but the current situation won't last indefinitely
  • JGB coupon rates will be decided based on prevailing market conditions
  • Striving to extend duration of JGB yields by correcting massive issuance of short-term JGBs FY2020

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This is a further indication from Japanese authorities that Change is coming from the Bank of Japan. Bank of Japan Governor Kuroda's term expires on April 8. If you've been following along you'll know that P{M Kishida will be discussing amending the BoJ mandate with whoever is the new head. Kishida is the guy in Japan with the authority to appoint a new BoJ Governor, so you can bet for sure whoever it is will be on Kishida's side.

The change will likely, at this stage, leave the 2% inflation target unchanged but will remove the requirement to reach it ASAP (that's my in a nutshell explanation). This opens the way for the BoJ to dial back its ultra-easy policy a little. The most likely initial step will be removing YCC, allowing yields on JGBs to rise higher.

USD/JPY has dropped as speculation of change has intensified.

usdyen daily 11 January 2023

Earlier, more to come says MUFG:

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More from Saito:

  • We're stepping up efforts to increase JGB issuance for retail individual investors to diversify jgb holders
  • JGB holdings by overseas investors have increased compared with 2013
  • Considering the possibility of GX bonds to be issued separately from construction, deficit bonds to fund efforts on climate change