Bank of Japan moves to lower yields

Bank of Japan moves to lower yields

Bank of Japan moves to lower yields

Winding it back would strengthen the yen, further undermining efforts to spur higher prices, while also hitting Japanese exporters.

The report on the Bank of Japan continued to roil the markets Monday, and overnight the 10-year Japanese government bond jumped by 5 basis points, to 0.083 percent, the highest since February.

The benchmark 10-year yield was flat at 0.080 percent. "That fear gets stoked when you have reports such as this", said Rory McPherson, head of investment strategy at Psigma Investment Management.

President Donald Trump's criticism of the Fed's interest rate policies in an interview with CNBC was part of the catalyst, since traders said the Federal Reserve would now be sure to stay on its rate hiking path to prove its independence.

"We see the latest news on trade policy as pointing to continued high risk of escalation between the USA and China, and a renewed focus of the Trump Administration on currency matters", said Goldman Sachs analysts.

A series of recent media reports suggest that the gathering could deliver anything from allowing for a more natural rise in long-term interest rates to no change and a mere assurance that policymakers are considering the side effects.

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Remarks on the issue wouldn't be appropriate given the proximity of the bank's monetary policy meeting, Kuroda said, adding that any policy decision will require sufficient discussion about prices and the state of the economy. The yield curve's flattening has been seen by some as a sign of an impending recession.

Trump's new threats to slap duties on all US imports from China triggered sell-offs across stock markets, though good corporate earnings kept a lid on losses.

Despite the deceleration in manufacturing economic activity, this data release is unlikely to influence the Bank of Japan's monetary policy.

Europe's autos sector was down 0.7 percent, hitting a 2-1/2 week low.

Europe's STOXX 600 fell 0.3 per cent as investors braced for a packed week of corporate earnings in Europe and a meeting between European Commissioner Jean-Claude Juncker and Trump to discuss threatened auto tariffs which could damage carmakers. Stripping out both fresh food and energy costs, prices rose only 0.2 per cent in June from a year earlier.

Concerns about growth affecting demand for fuel had dented crude prices in early trading, but oil rose again as tensions worsened between Iran and the US and a rig workers' strike caused potential supply disruption. Gold, hit by a strong greenback that makes the metal priced in dollars more expensive to foreign buyers, fell further towards one-year lows.

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