Yields on the Japan 10 Year bond are back to 0% for the first time since March.

Japan’s bonds are in plunge mode, now suffering their  worst month since at least 2010.   Asset managers are betting the Bank of Japan (meeting September 21st)  is plotting the return the steep yield curve.  Banks borrow short and lend long, so a flat yield curve has been a thorn in the side of lending institutions.  Banks have been suffering in Japan under the weight of negative rates, speculation is building that the BOJ will come to the rescue.

Special thanks to the Bloomberg Terminal

The Bank of Japan BOJ is under extreme pressure from their banking system.  Negative rates has backfired into a disaster for Japan’s financial institutions.  There is surging speculation the BOJ will make a major policy shirt later this month.

We have an index which tracks bonds with maturities longer than 10 years.  The basket has suffered the longest losing streak in three years.  Investors are worried Bank of Japan Governor Haruhiko Kuroda will reduce purchases of longer term debt after a comprehensive review of monetary policy on Sept. 20-21.

Thirty-year government bonds capped their biggest weekly slump since April 2013 after the BOJ refrained from purchasing the securities at its regular market operation on Sept. 2nd.