BoJ to raise ceiling on 10-year yields

The weakening in the yen to a 24-year low and a crack in the Bank of Japan’s ceiling on 10-year yields today is putting significant pressure on policymakers to respond. FX intervention is a possibility, but we doubt it would be effective. We suspect the BoJ will raise the ceiling on long-term interest rates from 0.25% to 0.50% before long, buying itself a respite from pressure on JGB yields and on the yen.