Investors are still pondering the implications of Friday's decision by theAnalysts at BofA estimate the BOJ's bond buying added $1.3 trillion to global liquidity in the past 18 months and provided a low floor for global rates, so any sustained rise in Japanese government bond yields could ripple though other bond markets.
Japanese 10-year yields surged to a nine-year-high up to 0.6% on Monday, and toward the new cap of 1.0%. That also put upward pressure on Treasury yields, where the 10-year rose 2 basis points to 3.98%. While the yen had initially rallied on the BOJ move, it soon reversed course as investors still seemed happy to run carry trades, or yen-funded positions in higher-yielding currencies.
"Friday's action might best be viewed as an attempt to head off a fresh wave of yen-weakening carry trade activity, by at least ceasing to resist pressure for 10-year yields to rise above 0.5%," said Ray Attrill, head of FX strategy at National Australia Bank.in the pound by the most since mid-June ahead of the Bank of England rate decision on Thursday.24% from a record low of $1.033 against the dollar in September after a disastrous budget, hitting a 15-month high of $1.
Oil prices took a breather with brent flat at $85.00 a barrel, while U.S. crude rose 18 cents to $80.78.