Investors resume betting on Bank of Japan policy change

International investors are short-selling Japanese bonds, raising bets that Japan's central bank will be forced to change its ultra-loose monetary policy soon.

The resumption of rates occurred against the background of data presented at the end of last month. In November, consumer prices in Tokyo showed the highest rate of growth in annual terms over the past forty years. This means that the BOJ may be closer to achieving the 2% inflation target.

According to Masayuki Koguchi, general manager at the fixed income investment division of Mitsubishi UFJ Kokusai Asset Management, there is growing speculation that Japan's central bank may adjust control of the yield curve.

For several days, rates have kept the yield on ten-year benchmark bonds near the upper limit of the target corridor, that is, at 0.25%. This was the case even as the Bank of Japan continued to offer to purchase an unlimited number of bonds with this maturity.