Japan - bond buyers already testing credibility of BOJ's new monetary policy framework

Reuters report on bond buyers already testing out the Bank of Japan

• The BOJ last week shifted its primary policy tool away from expanding the money supply and towards controlling the 'yield curve'
• Trying to ensure long-term rates remain sufficiently above currently negative short-term rates so banks can make a profit from lending into Japan's stagnant economy
• BOJ has said it will keep the 10-year bond yield at "current levels around zero percent"

But ....

• The market sent 10-year bond yields to minus 0.09 percent this week
• Pressuring the BOJ to take action
• One such action - reducing the BOJ's own massive bond purchases - would bring into question a key plank of the stimulus policy it has been following since 2013 and could have a much more unsettling effect on markets

Plenty more at the link. More headaches for the Bank of Japan.