Japanese government bond yields up, stocks fall

Yields on Japanese government bonds rose, and the Nikkei index fell today, Wednesday, after the Japanese central bank surprised the markets on Tuesday by changing its policy to control the yield curve.

According to “Reuters”, the yield on government bonds for ten years jumped seven basis points to 0.480 percent, marking the highest level since July of 2015 and close to the level of 0.50 percent, which is the upper limit of the revised policy range of the Bank of Japan.

The Nikkei index closed down 0.68 percent at 26387.72, its lowest closing level since October 13, after volatile trading that witnessed positive performance for a short period. The main index lost 3 percent in the wake of the Bank of Japan’s decision, which aims to mitigate some of the costs of long-term monetary stimulus

The broader Topix index fell 0.64 percent to 1,893.32.

The sub-index for auto manufacturers fell 2.36 percent, topping the losses of the other 32 industrial sub-indices, after the yen rose on the back of the central bank’s move.

As for the banking sector, it rose 2.6 percent, and was the best performer among all sectors, amid expectations that higher interest rates would lead to an increase in profitability. The insurance sector also rose 0.08 percent.