In addition to a sliding yen and soaring stock market, Japan's radical monetary policies are having one more side effect that policymakers may not have bargained for: they've created the most volatile government bond market in the world, analysts say.
Yields on benchmark 10-year Japanese government bonds (JGBs) on Tuesday hit 0.825 percent, their highest level since January.
In fact, JGB yields have spiked 26 basis points since Thursday as the yen weakened decisively through the 100 mark against the dollar, encouraging investors to dump bonds for stocks. A rise in U.S. Treasury yields amid brighter economic data has also encouraged the sell-off in JGBs.
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Since the Bank of Japan (BOJ) unveiled its radical monetary stimulus program in April to kick start a moribund economy and meet a 2 percent inflation target, the JGB market has been characterized by volatility as investors try to asses just what the unprecedented stimulus means for the world's second biggest bond market.
"In absolute terms, we are looking at 0.8 percent on the 10-year yield but if you look at it proportionately, the moves are significant," said Andre de Silva, head of Asia-Pacific Rates at HSBC in Hong Kong.
"We are looking at the most volatile bond market in the world and if you put that into context on April 4 when the BOJ announced its policies, yields were half the levels they are now. So we've seen a doubling of yield levels and that is quite alarming," he told CNBC Asia's Cash Flow.