Japandemonium - Is Kuroda Losing Control Of JGB Market?

For the first time since February, 5Y JGB yields have spiked above BOJ policy rates (to -9.5bps), but despite a policy of maintaining 10Y yields and attempting to steepen the yield curve, it appears Kuroda and his cronies have lost control as the short-end of the Japanese bond market is collapsing.

Broadly speaking it seems investors are dumping JGBs in favor of 'cheap' US Treasuries once again...

 

As the UST-JGB spread is at 6 year highs...historically an attractive relative-value entry...

 

2Y JGB yields are up 5 days in a row soaring 16bps to 9-month highs

 

But 10Y yield are breaking notably above the policy rate of 0.00%...

 

And the JGB yield curve is bear flattening dramatically... not what the BOJ wanted (despite the bank stocks spike post-Trump)...

 

With a market bereft of liquidity, and rapidly losing its anchor to BOJ policy rates, Kuroda and his pals better start praying for some divine intervention to stall this inflationary burst crushing the Potemkin village of a market they have created.