Eurozone bonds steady post BOJ shifts

Eurozone bond yields remained relatively stable on Tuesday, with the global market’s attention turning to the Bank of Japan’s decision to end its eight-year practice of negative interest rates, Reuters reported.

The benchmark 10-year bond yield in Germany saw a marginal increase of less than one basis point, settling at 2.462 per cent. This slight uptick follows a week of stronger-than-anticipated US economic data, prompting investors to scale back their expectations for rate cuts by the Federal Reserve.

In a similar vein, Germany’s 2-year bond yield edged up slightly, coming in at 2.923 per cent. In a significant policy shift, the Bank of Japan introduced the overnight call rate as its new benchmark, guiding it to hover between 0 per cent and 0.1 per cent, a move away from the previous key rate of -0.1 per cent.

According to analysts spoke to Reuters, a further increase in rates may be necessary before Japanese investors consider withdrawing from foreign bond markets to repatriate funds. This cautious stance reflects a broader anticipation of how global bond markets will react to the BOJ’s policy adjustments.