BoJ Ueda Warns of Risks from Super-Long Yield Swings

Bank of Japan (BoJ) Governor Kazuo Ueda said on Wednesday the central bank will remain alert to the risk that large swings in super-long bond yields could impact shorter-term borrowing costs and the broader economy.

His comments highlight the BoJ's increasing focus on recent volatility in super-long JGB yields, which may influence next month’s bond tapering discussions.

Ueda noted that short- and medium-term rates have a greater impact in Japan due to household and corporate debt structures.

However, he cautioned, “large swings in super-long yields could affect long-term bond yields as well as those on short and medium-term bonds.” He added, “We’ll carefully watch market developments and their impact on the economy.” Ueda also pointed to high uncertainty surrounding U.S. trade policy and its potential effects on Japan.

Yields on super-long JGBs recently surged to record levels amid a global bond sell-off driven by concerns over deteriorating fiscal conditions in advanced economies.