Driving interest rates below zero, the Bank of Japan (BoJ) has turned a comatose government bond market into an enormous free-for-all, complicating the central bank's own efforts to kick-start growth and end deflation.
The US$9 trillion market for Japanese government bonds (JGBs) had been all but paralysed since the BoJ began a massive monetary easing three years ago that made the bank the dominant buyer.
But in the two months since the BoJ announced it was imposing a negative interest rate, JGBs have become a volatile commodity, with prices swinging wildly as below-zero yields confound investors' attempts to find fair market value.
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The US$9 trillion market for Japanese government bonds (JGBs) had been all but paralysed since the BoJ began a massive monetary easing three years ago that made the bank the dominant buyer.
But in the two months since the BoJ announced it was imposing a negative interest rate, JGBs have become a volatile commodity, with prices swinging wildly as below-zero yields confound investors' attempts to find fair market value.
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