TOKYO — Bond traders seem to be sending a message to the Bank of Japan and the Ministry of Finance that the late 1990s are back.
Yet far from partying like it’s 1999, the rise in 20-year yields back to levels from that year suggests trouble ahead for Asia’s second-biggest economy — and perhaps global markets.
It was 26 years ago when the BOJ cut rates to zero, the first major monetary authority to do so. This week, the 20-year Japanese government bond (JGB) rate rose to 2.655%, the highest level since 1999. It sparked a level of volatility Tokyo markets haven’t seen in years.
Since 1999, a succession of BOJ leaders have been trying to get short-term rates closer to 1% than 0%. To no avail. Today’s BOJ Governor Kazuo Ueda has gotten no further away from zero than 2003-2008 Governor Toshihiko Fukui.