BOJ’s Yield Curve Control “Tweak” Ends In Disaster As Yen Tumbles, JGB Yields Soar

7 hours until the BOJ blows up its own bond market according to the Nikkei. Or maybe not

— zerohedge (@zerohedge) July 27, 2023

• BOJ’s Yield Curve Control “Tweak” Ends In Disaster As Yen Tumbles, JGB Yields Soar
  by Tyler Durden, https://www.zerohedge.com/
  Last Friday, ahead of the BOJ’s surprise Yield Curve Control tweak, we predicted that not even the BOJ – a central bank  that has traditionally won the Olympics in monetary policy stupidity – would be so mentally challenged as to pursue the type of half-assed YCC “tweak” that the Nikkei had leaked just hours earlier. After all, it should have been obvious to most – we thought – that a non-tweak tweak such as the one we learned the BOJ may was contemplating, would achieve nothing in terms of propping up the yen (the clear intention of Ueda, who is terrified of seeing the USDJPY rise to 150 again at which point it may be game over for Japan), while it would certainly blow up the JGB market, and set the BOJ on collision course with an even bigger bond market disaster than the one seen in January 2023, while at the same time sparking even more aggressive yen selling.
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  Alas, we were wrong and the BOJ again managed to shock us, and the market, with its stupidity when on Friday it announced it would engage in a half-pregnant YCC “tweak” where it would still keep the 10Y target at 0.5% but raise the JGB intervention “strict cap” from the old 0.50% level to anywhere between 0.5% and 1.0% (a range in which it would “nimbly conduct market operations” whatever the hell that means).
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  read more.

TL/DR
1. BOJ too scared to explicitly normalize policy and lift 10Y yield target
2. BOJ too afraid of blowback if it does nothing with inflation at 3%, so it implicitly raised 10Y target to 1.0%.
3%. Market confused by half-assed measure which does nothing to tame inflation

— zerohedge (@zerohedge) July 28, 2023

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