CNY

Currency traders are all nestled in their spreads, with visions of sweet incomes dancing in their heads. Equities and risk-sensitive currencies are inching higher, the dollar is trading on a mixed basis against its major rivals, and Treasury yields are slightly weaker across the curve. Japan’s yen is holding onto gains achieved on Monday when the central bank shocked markets by opting to relax its yield-suppression efforts. Even if the Bank of Japan’s policy adjustment was not designed to tighten financial conditions, the effect has been just that: two-year government bond yields are above zero for the first time since...

Santa Claus might not come this year. The jolly old elf—known for putting gifts in the stockings of good little boys and girls across the financial markets each December—was shot down over Tokyo last night by a central banker wielding a monetary policy-guided surface-to-air missile. His condition is unknown at this time. In a surprise decision, the Bank of Japan increased the upper limit for its ten-year government bond target from 0.25 percent to 0.5 percent, almost doubling effective interest rates in one of the world’s most important funding currencies. Governor Haruhiko Kuroda said the move was aimed at reducing...