Donald Trump might have just complicated the Bank of Japan's abortive efforts to spur inflation.
The global rout in bond markets that accompanied Trump's surprise win has also spilled over to Japan where the central bank radically shifted its policy framework at its late-September meeting, making yield-curve control its centrepiece, rather than its already negative benchmark interest rate.
The BOJ said it would buy 10-year Japanese government bonds (JGBs) so that the yield would hover around zero percent, while keeping a lid on short-term rates. The deposit rate was left unchanged at negative 0.1 percent.
Sticking with the yield target hadn't been too difficult until recently: The 10-year JGB yield had largely remained slightly negative since the BOJ's surprise decision in late January to introduce its negative interest-rate policy.
That's helped ease another concern: That the central bank, which already owns more than a third of all JGBs, would run out of bonds to buy as it continued with its planned 80 trillion yen (around $735.27 billion) annual pace of expansion of its monetary base.
But that calm has been challenged by the slide in major global bond markets in recent days. Bond prices move inversely to yields.
U.S. Treasurys sold off on bets Trump's plans to goose the economy through fiscal stimulus would increase the budget deficit and fan inflation. The yield on the benchmark 10-year note rose to its highest level since late December. The benchmark yield touched levels above 2.3 percent in the U.S. earlier this week, up from levels below 1.8 percent in the days before the election. On Thursday, it was around 2.20 percent.