Yen Surges as Kuroda’s Yield Cap Shock Heralds Central Bank Normalization

The ripple effects also spread far outside Japan, with U.S. stock-index futures slumping and Treasury yields climbing. Photo: VCG

(Bloomberg) — Bank of Japan Governor Haruhiko Kuroda shocked markets by doubling a cap on 10-year yields, sparking a jump in the yen and a slide in government bonds in a move that helps pave the way for possible policy normalization under a new governor.

The BOJ will now allow Japan’s 10-year bond yields to rise to around 0.5%, up from the previous limit of 0.25%, according to a policy statement Tuesday.