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https://www.pimco.com/en-us/insights/blog/boj-moves-toward-phasing-out-yield-curve-control
Submission: On October 05 via api from US — Scanned from DE
Submission: On October 05 via api from US — Scanned from DE
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<li> <a href="/en-us/investments/mutual-funds/high-yield-municipal-bond-fund">High Yield Municipal Bond Fund</a> </li>
<li> <a href="/en-us/investments/mutual-funds/income-fund">Income Fund</a> </li>
<li> <a href="/en-us/investments/mutual-funds/international-bond-fund-us-dollar-hedged">International Bond Fund (U.S. Dollar-Hedged)</a> </li>
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<li> <a href="/en-us/investments/mutual-funds/municipal-bond-fund">Municipal Bond Fund</a> </li>
<li> <a href="/en-us/investments/mutual-funds/short-asset-investment-fund">Short Asset Investment Fund</a> </li>
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<div class="oneHalf">
<div class="component cFundFinderDesktop">
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</div>
</div>
</div>
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<div class="desktopRightCell oneHalf">
<div class="oneHalf headquatersCell">
<h5>Pimco Headquarters</h5>
<address>650 Newport Center Drive<br> Newport Beach, CA 92660 </address>
</div>
<div class="oneHalf globalOfficesCell" role="region" aria-label="Global Offices">
<h5>Global Offices</h5>
<ul>
<li> <a href="##" "="" aria-describedby="newportBeachHeadquarters">Newport Beach (HQ)</a>
<div id="newportBeachHeadquarters" class="sr-only">
<h5>Pimco Headquarters</h5>
<p>Pacific Investment Management Company LLC </p>
<address> 650 Newport Center Drive<br> Newport Beach, CA 92660 </address> <br>
<p>TEL: 949-720-6000<br> FAX: 949-720-1376</p> <br>
<p>Shareholder Services <br> TEL: 800-927-4648 <br> 6AM - 4PM PST </p> <br>
<p> LEI: 549300KGPYQZXGMYYN38</p>
</div>
</li>
<li> <a href="##" "="" aria-describedby="austinOffice">Austin</a>
<div class="sr-only" id="austinOffice">
<h5>Austin</h5>
<p>Pacific Investment Management Company LLC </p>
<address>401 Congress Ave, Ste 2200<br> Austin, TX 78701</address> <br>
<p>TEL: +1 737-990-3000</p>
</div>
</li>
<!--<li> <a href="##"" aria-describedby="bermudaOffice">Bermuda</a> <div class="sr-only" id="bermudaOffice"> <h5>Bermuda</h5> <p>Pacific Investment Management Company LLC </p> <address>26 Reid Street, 7th Floor<br /> Hamilton HM 11, Bermuda</address> <address class="googleAddress" style="display: none;">26 Reid Street Hamilton HM 11, Bermuda</address> <br /> <p>TEL: +1 212-776-1500 <br /> FAX: +1 212-776-1520</p> </div> </li>-->
<li> <a href="##" "="" aria-describedby="chicagoOffice">Chicago</a>
<div class="sr-only" id="chicagoOffice">
<h5>Chicago</h5>
<p>Pacific Investment Management Company LLC </p>
<address> 444 W. Lake Street, Suite 2333<br> Chicago, IL 60606 </address>
<address class="googleAddress" style="display: none;">444 W Lake St #2333</address> <br>
<p>TEL: (858) 436-2200<br> FAX: (858) 436-2201</p>
</div>
</li>
<li> <a href="##" "="" aria-describedby="dublinOffice">Dublin</a>
<div class="sr-only" id="dublinOffice">
<h5>Dublin</h5>
<p>PIMCO Europe GmbH Irish Branch, PIMCO Global Advisors (Ireland) Limited </p>
<address> 3rd Floor, Harcourt Building<br> 57B Harcourt Street<br> Dublin D02 F721, Ireland </address> <br>
<p>TEL: +353 1264 5800</p> <br>
<p>Registered in Ireland<br> Company Nos. 909462, IE275423</p>
</div>
</li>
<li> <a href="##" "="" aria-describedby="hongKongOffice">Hong Kong</a>
<div class="sr-only" id="hongKongOffice">
<h5>Hong Kong</h5>
<p>PIMCO Asia Limited </p>
<address> Suite 2201, 22nd Floor<br> Two International Finance Centre, 8 Finance Street, Central</address> <br>
<p>TEL: 852-3650-7700 </p>
<p>LEI: 549300OKIQPRBE0U2256</p>
</div>
</li>
<li> <a href="##" "="" aria-describedby="londonOffice">London</a>
<div class="sr-only" id="londonOffice">
<h5>London</h5>
<p>PIMCO Europe Ltd </p>
<address>11 Baker Street<br> London W1U 3AH, UK</address>
<address class="googleAddress" style="display: none;">PIMCO Europe Ltd, 11 Baker Street, London W1U 3AH, UK</address> <br>
<p>TEL: +44 (0) 20 3640 1000 <br> FAX: +44 (0) 20 3640 1007</p> <br>
<p>Shareholder services<br> TEL: +44 (0) 20 3640 1407<br> 9AM to 5PM </p> <br>
<p> Registered in UK and Wales, Company No. 2604517 <br> LEI: 549300GHCCJWKY72R127 </p>
</div>
</li>
<li> <a href="##" "="" aria-describedby="luxembourgOffice">Luxembourg</a>
<div class="sr-only" id="luxembourgOffice">
<h5>Luxembourg</h5>
<p>PIMCO Global Advisors (Luxembourg) S.A.</p>
<address>2, rue du Fossé, <br> L-1536 Luxembourg, <br> Grand Duchy of Luxembourg</address>
<address class="googleAddress" style="display: none;">2, rue du Fossé, L-1536 Luxembourg, Grand Duchy of Luxembourg</address> <br> <!--<p>TEL: +1 212-776-1500 <br /> FAX: +1 212-776-1520</p>-->
</div>
</li>
<li> <a href="##" "="" aria-describedby="madridOffice">Madrid</a>
<div class="sr-only" id="madridOffice">
<h5>Madrid</h5>
<p>PIMCO Europe GmbH – Spain</p>
<address>Paseo de la Castellana 43, <br> Oficina 05-111, <br> 28046 Madrid</address>
<address class="googleAddress" style="display: none;">Paseo de la Castellana 43, Oficina 05-111, 28046 Madrid</address> <br>
<p>TEL: +34 810 809 916 <br> NIF W2765338E</p>
</div>
</li>
<li> <a href="##" "="" aria-describedby="miamiOffice">Miami</a>
<div class="sr-only" id="miamiOffice">
<h5>Miami</h5>
<p>Pacific Investment Management Company LLC</p>
<address>600 Brickell Ave, Suite 2100<br> Miami, FL 33131</address>
</div>
</li>
<li> <a href="##" "="" aria-describedby="milanOffice">Milan</a>
<div class="sr-only" id="milanOffice">
<h5>Milan</h5>
<p>PIMCO Europe GmbH - Italy </p>
<address>Corso Vittorio Emanuele II, 37<br> Piano 5<br> Milano, Italy 20122</address> <br>
<p>TEL: +39 02 9475 5400<br> FAX: +39 02 9475 5402</p> <br>
<p> Iscritta al Registro delle Imprese in Italia al n. 10005170963 <br> LEI: 549300GHCCJWKY72R127</p>
</div>
</li>
<li> <a href="##" "="" aria-describedby="montrealOffice">Montreal</a>
<div class="sr-only" id="montrealOffice">
<h5>Montreal</h5>
<p>PIMCO Canada Corp</p>
<address>Office 1566 – 1155 Metcalfe Street,<br> Montreal, QC H3B 2V6</address>
<address class="googleAddress" style="display: none;">Office 1566 – 1155 Metcalfe Street, Montreal, QC H3B 2V6 </address> <br> <!--<p>TEL: +1 212-776-1500 <br /> FAX: +1 212-776-1520</p>-->
</div>
</li>
</ul>
<ul>
<li> <a href="##" "="" aria-describedby="munichOffice">Munich</a>
<div class="sr-only" id="munichOffice">
<h5>Munich</h5>
<p>PIMCO Europe GmbH </p>
<address>Seidlstr. 24-24a, 80335 München, Deutschland</address> <br>
<p>TEL: +49 89 26209 6000<br> FAX: +49 89 26209 6005 </p> <br>
<p> Registriert in Deutschland, Firmennr. 192083 <br> Eingetragener Firmensitz <br> LEI: 549300KW6332H0XL8X85</p>
</div>
</li>
<li> <a href="##" "="" aria-describedby="newYorkOffice">New York</a>
<div class="sr-only" id="newYorkOffice">
<h5>New York</h5>
<p>Pacific Investment Management Company LLC </p>
<address>1633 Broadway, New York, NY 10019</address> <br>
<p>TEL: +1 212-776-1500<br> FAX: +1 212-776-1520</p> <br>
<p> LEI: 549300KGPYQZXGMYYN38</p>
</div>
</li>
<li> <a href="##" "="" aria-describedby="parisOffice">Paris</a>
<div class="sr-only" id="parisOffice">
<h5>Paris</h5>
<p>PIMCO Europe GmbH - France</p>
<address>50–52 Boulevard Haussmann,<br> 75009 Paris</address>
<address class="googleAddress" style="display: none;">50–52 Boulevard Haussmann, 75009 Paris </address>
</div>
</li>
<li> <a href="##" "="" aria-describedby="saoPauloOffice">São Paulo</a>
<div class="sr-only" id="saoPauloOffice">
<h5>São Paulo</h5>
<p>Pacific Investment Management Company LLC </p>
<address> Av. Brg. Faria Lima, 3477<br> Itaim Bibi, São Paulo - SP 04538-132<br> Brazil </address>
<address class="googleAddress" style="display: none;">Av. Brg. Faria Lima, 3477 - Itaim Bibi, São Paulo - SP, 04538-133, Brazil </address> <br>
<p>TEL: +55 (11) 3957-3300<br> FAX: +55 (11) 3957-3320</p>
</div>
</li>
<li> <a href="##" "="" aria-describedby="shanghaiOffice">Shanghai</a>
<div class="sr-only" id="shanghaiOffice">
<h5>Shanghai</h5>
<p>PIMCO Investment Management (Shanghai) Limited</p>
<address> Suite 7204, Shanghai Tower<br> 479 Lujiazui Ring Road, Pudong<br> Shanghai, 200120, China </address>
<address class="googleAddress" style="display: none;">Shanghai Tower, Pudong, Shanghai, 200120</address> <br>
<p>Registered with Asset Management Association of China as Private Fund Manager (Registration No. P1071502, Type: Other)</p>
</div>
</li>
<li> <a href="##" "="" aria-describedby="singaporeOffice">Singapore</a>
<div class="sr-only" id="singaporeOffice">
<h5>Singapore</h5>
<p>PIMCO Asia Pte. Ltd</p>
<address>8 Marina View, #30-01, Asia Square Tower 1, Singapore 018960</address>
<address class="googleAddress" style="display: none;">8 Marina View, Singapore 018960</address> <br>
<p>TEL: 65 6491-8000<br> FAX: 65 6538-2700</p> <br>
<p> Registration No. 199804652K<br> LEI: 549300JX6BNKEHZFQE44</p>
</div>
</li>
<li> <a href="##" "="" aria-describedby="solanaBeachOffice">Solana Beach</a>
<div class="sr-only" id="solanaBeachOffice">
<h5>Solana Beach</h5>
<p>Pacific Investment Management Company LLC</p>
<address>440 Stevens Avenue, Suite 260<br> Solana Beach, CA 92075</address>
<address class="googleAddress" style="display: none;">440 Stevens Avenue, Solana Beach</address> <br>
<p>TEL: (858) 436-2200 <br> FAX: (858) 436-2201</p>
</div>
</li>
<li> <a href="##" "="" aria-describedby="sydneyOffice">Sydney</a>
<div class="sr-only" id="sydneyOffice">
<h5>Sydney</h5>
<p>PIMCO Australia Pty. Ltd </p>
<address>Level 19, 5 Martin Place, Sydney, New South Wales 2000, Australia</address>
<address class="googleAddress" style="display: none;">5 Martin Place, Sydney, New South Wales 2000, Australia</address> <br>
<p>TEL: 612-9279-1771 <br> FAX: 612-9279-2580</p> <br>
<p> ABN 54 084 280 508<br> AFS Licence 246862 <br> LEI: 549300RE60KX7TX1DZ43</p>
</div>
</li>
<li> <a href="##" "="" aria-describedby="taipeiOffice">Taipei</a>
<div class="sr-only" id="taipeiOffice">
<h5>Taipei</h5>
<p>PIMCO Taiwan </p>
<address> 40F., No.68, Sec. 5, Zhongxiao E. Rd., Xinyi Dist. Taipei City, 11065<br> Taiwan (R.O.C.) </address>
<address class="googleAddress" style="display: none;">No. 68, Section 5, Zhongxiao East Road, Xinyi DistrictTaipei City, Taiwan 110</address> <br>
<p>TEL: 886-2-8729-5500</p>
</div>
</li>
<li> <a href="##" "="" aria-describedby="tokyoOffice">Tokyo</a>
<div class="sr-only" id="tokyoOffice">
<h5>Tokyo</h5>
<p>PIMCO Japan Ltd. </p>
<address>Toranomon Towers Office 18F,<br> 4-1-28, Toranomon, Minato-ku<br> Tokyo, Japan 105-0001<br> 105-0001 <br> 東京都港区虎ノ門4-1-28</address>
<address class="googleAddress" style="display: none;">4-1-28, Toranomon, Minato-ku, Tokyo, Japan</address> <br>
<p>TEL: 813-5777-8150 <br> FAX: 813-5777-8151</p> <br>
<p> LEI:549300V5J7VWTFWTZY22 </p>
</div>
</li>
<li> <a href="##" "="" aria-describedby="torontoOffice">Toronto</a>
<div class="sr-only" id="torontoOffice">
<h5>Toronto</h5>
<p>PIMCO Canada Corp.</p>
<address>199 Bay Street, Suite 2050, Commerce Court Station, P.O. Box 363, Toronto, ON, M5L 1G2</address>
<address class="googleAddress" style="display: none;">199 Bay Street, Suite 2050, Toronto, Canada</address> <br>
<p>TEL: +1 416 368 3350 <br> FAX: +1 416 368 3576</p>
</div>
</li>
<li> <a href="##" "="" aria-describedby="zurichOffice">Zurich</a>
<div class="sr-only" id="zurichOffice">
<h5>Zurich</h5>
<p>PIMCO Schweiz GmbH</p>
<address>Brandschenkestrasse, 41 <br> Zurich, Switzerland 8002</address> <br>
<p>TEL: +41 44 512 49 10</p> <br>
<p> Registered in Switzerland, Company No. <br> CH-020.4.038.582-2 <br> LEI: 549300GHCCJWKY72R127 </p>
</div>
</li>
</ul>
</div>
</div>
</div>
</div>
</li>
<li id="mobileLoginRegisterLinks">
<ul class="loginRegister cf">
<li class="borderRight registrationLinks"> <a href="/en-us/account/registration?pageurl=">Log in</a> </li>
<li class="registrationLinks"> <a href="/en-us/account/registration?pageurl=">Register</a> </li>
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<li id="mobileUserDropDownLinksTarget" style="display: none;"></li>
<li>
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</li>
<li> <span class="languageSwitcherSet dropdown"> </span> </li>
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</div>
</div>
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</div>
<div class="searchOverlay hidden"></div>
<div class="searchWrapper">
<div class="">
<div id="coveoC606340Z" class="CoveoSearchInterface Coveostate CoveoComponentState CoveoComponentOptions CoveoQueryController CoveoHistoryController CoveoDebug coveo-after-initialization" data-auto-trigger-query="false"
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<div class="CoveoForSitecoreBindWithUserContext"></div>
<div class="CoveoForSitecoreSyntax"></div>
<div class="CoveoTriggers"></div>
<div class="CoveoHiddenQuery"></div>
<div>
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<div>
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<div>
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</div>
<div>
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<div>
<span class="CoveoForSitecoreExternalContent" data-sc-sources="Pimco US Site">
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<script type="text/ng-template" id="autoSuggestionDesktopTemplate.html"> <div class="searchbarResults" ng-cloak ng-if="showAutoSuggest"> <div class="resultsTable"> <div ng-repeat="category in caty = (sctrl.categories)"> <div class="type"> {{category.name}} </div> <div class="results"> <ul> <li ng-repeat="item in category.items"> <a ng-href="{{ item.url }}" ng-if="item.isDocument" target="_blank"> {{ item.title }} <i data-pua="e60f" class="icomoon icon-file4"></i> <span ng-if="item.isLocked" ng-class="['lockIcon', item.UnLockedStatus ? 'unlocked' : 'locked' ]"></span> </a> <a ng-if="item.isChart" ng-href="{{ item.url }}" target="_blank"> {{item.title }} <i data-pua="e60f" class="icomoon icon-bars3"></i> <span ng-if="item.isLocked" ng-class="['lockIcon', item.UnLockedStatus ? 'unlocked' : 'locked']"> </span> </a> <a ng-if="!item.isDocument && !item.isChart" ng-href="{{ item.url }}"> {{ item.title }} <span ng-if="item.isLocked" ng-class="['lockIcon', item.UnLockedStatus ? 'unlocked' : 'locked']"> </span> </a> </li> </ul> </div> </div> </div> <div class="seeAll"> <a href="" ng-click="searchResult(sctrl.desktopSearch)">See All</a> </div> </div>
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<script type="text/ng-template" id="autoSuggestionMobileTemplate.html"> <div ng-repeat="category in caty = (sctrl.categories)" ng-cloak> <div class="results"> <ul> <li ng-repeat="item in category.items"> <a ng-if="{{item.isDocument}}" href="{{ item.url }}" target="_blank"> - {{item.title}} <i data-pua="e60f" class="icomoon icon-file4"></i> <span ng-if="{{item.UnLockedStatus}}" class="lockIcon unlocked"></span> <span ng-if="!{{item.UnLockedStatus}}" class="lockIcon locked"></span> </a> <a ng-if="!item.isDocument" href={{item.url}}"> - {{item.title}} <span ng-if="{{item.UnLockedStatus}}" class="lockIcon unlocked"></span> <span ng-if="!{{item.UnLockedStatus}}" class="lockIcon locked"></span> </a> </li> </ul> </div> </div>
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<style>
input[type=checkbox] {
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.mycontentShare.visible+.mycontentShareList.visible input[type=checkbox] {
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}
</style>
<section ng-controller="MyContentCtrl" class="ng-scope">
<div ng-class="['mycontent-backdrop',isBackdropVisible ? 'show':'']" ng-click="hideMyContent()" class="mycontent-backdrop"></div>
<div class="sr-only" role="alert" id="sr-error-messages-share-dialog"></div>
<div class="component cMyContent initialized" id="fancyMyContent" style="display: none; position: absolute; left: 790px;">
<div class="sr-only" id="savedContentLable">Saved Content And Share Content</div>
<div tabindex="-1" role="dialog" aria-describedby="savedContentDesc" aria-labelledby="savedContentLable" class="mycontentContainer">
<div tabindex="0" class="sr-only" id="saveContentFirst"></div>
<div class="my-content-padded empty" ng-show="showMainDiv">
<section id="savedContentDesc" class="emptyContent">
<h3>Saved Content</h3>
<p>You have not saved any content. None of the information on this page is directed at any investor or category of investors.</p>
<img alt="" src="/app/img/empty-my-content.jpg" role="presentation">
</section>
<section id="filterListMain">
<div class="edit cf">
<div class="deleteAndShare">
<div class="selectricWrapper myContentFilter ng-pristine ng-untouched ng-valid ng-not-empty">
<div class="selectricHideSelect"><select role="listbox" ng-model="filterDropDown" class="myContentFilter ng-pristine ng-untouched ng-valid ng-not-empty" ng-change="filterMyContentItems(filterDropDown)" tabindex="0">
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<option ng-repeat="filter in myContentFilters" pimco-selectric-drp="" custom-arrow="true" drp-label="View All" value="all" class="ng-binding ng-scope ng-isolate-scope">View All</option>
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<option ng-repeat="filter in myContentFilters" pimco-selectric-drp="" custom-arrow="true" drp-label="View All" value="chartlibrary" class="ng-binding ng-scope ng-isolate-scope">Chart Library</option>
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<option ng-repeat="filter in myContentFilters" pimco-selectric-drp="" custom-arrow="true" drp-label="View All" value="experts" class="ng-binding ng-scope ng-isolate-scope">Experts</option>
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<option ng-repeat="filter in myContentFilters" pimco-selectric-drp="" custom-arrow="true" drp-label="View All" value="insights" class="ng-binding ng-scope ng-isolate-scope">Insights</option>
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<option ng-repeat="filter in myContentFilters" pimco-selectric-drp="" custom-arrow="true" drp-label="View All" value="documents" class="ng-binding ng-scope ng-isolate-scope">Documents</option>
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<option ng-repeat="filter in myContentFilters" pimco-selectric-drp="" custom-arrow="true" drp-label="View All" value="video" class="ng-binding ng-scope ng-isolate-scope">Video</option>
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<option ng-repeat="filter in myContentFilters" pimco-selectric-drp="" custom-arrow="true" drp-label="View All" value="products" class="ng-binding ng-scope ng-isolate-scope">Products</option>
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<option ng-repeat="filter in myContentFilters" pimco-selectric-drp="" custom-arrow="true" drp-label="View All" value="order_materials" class="ng-binding ng-scope ng-isolate-scope">Orderable Materials</option>
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<option ng-repeat="filter in myContentFilters" pimco-selectric-drp="" custom-arrow="true" drp-label="View All" value="subscriptions" class="ng-binding ng-scope ng-isolate-scope">Subscriptions</option>
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</select></div>
<div class="selectric">
<p class="label">View All</p><i data-pua="e653" class="icomoon icon-arrow-down9"></i>
</div>
<div class="selectricItems" tabindex="-1">
<div class="selectricScroll">
<ul>
<li data-index="0" class="selected">View All</li>
<li data-index="1" class="">Chart Library</li>
<li data-index="2" class="">Experts</li>
<li data-index="3" class="">Insights</li>
<li data-index="4" class="">Documents</li>
<li data-index="5" class="">Video</li>
<li data-index="6" class="">Products</li>
<li data-index="7" class="">Orderable Materials</li>
<li data-index="8" class="last">Subscriptions</li>
</ul>
</div>
</div><input class="selectricInput" tabindex="0" id="firstSelectricInput" aria-label="Content Type" role="listbox" readonly="readonly" aria-expanded="false" autocomplete="off">
</div>
<a href="javascript:void(0);" class="delete" onclick="return false" ng-click="deleteMyContentItems()">
<span aria-hidden="true"><i data-pua="e664" class="icomoon icon-bin"></i></span>
<span class="sr-only">Delete</span>
<span class="hideForMobile" aria-hidden="true">Delete</span>
</a>
<a href="javascript:void(0);" class="share" onclick="return false" id="shareMyContent" ng-click="toggleSharePanel($event)">
<span aria-hidden="true"><i data-pua="e600" class="icomoon icon-pimcoshare"></i></span>
<span class="sr-only">Share</span>
<span class="hideForMobile" aria-hidden="true">Share</span>
</a>
</div>
</div>
<div class="contents">
<script type="text/template" id="listContainerData"> [
]
</script>
<section class="myContentFilterList">
<div class="filterListInner">
<!-- ngRepeat: myContentItem in myContentCollectionData track by $index -->
<section class="submitOrder">
<div class="order-content">
</div>
<a href="javascript:void(0);" class="button button-blue cta veritasOrder" ng-click="submitOrder()">Submit Order</a>
</section>
</div>
</section>
</div>
</section>
<section class="subscriptionsList">
<div class="article-container">
<div class="button-contain">
<a fb-href="https://subscriptions.pimco.com?tk=r3GaXNTsrViWcABgAd-6dqgmr-s1v5Q6sOTXvd-30e1W_9daw9VpDNaymd-YAxt5OK1s7ohfVXC6YNy7bcH3rx4-1F_C8JInjWVrQOQxMPX-VtsMYO11eeH02AX2a04ZigMdew9Az3glLTRPt424eA2" pimco-fancy-box="" fb-type="iframe" fb-width="90%" fb-height="80%" class="button button-blue Subscriptions ng-isolate-scope">Manage Subscriptions</a>
</div>
</div>
</section>
</div>
<section class="mycontentShare ng-invalid ng-invalid-required" ng-form="" name="ToEmail" novalidate="">
<a href="" class="shareBack" ng-click="toggleSharePanel($event)">
<i data-pua="e64a" class="icomoon icon-arrow-left7"></i>
Back
<span class="sr-only">To Saved Content</span>
</a>
<fieldset class="email">
<div>
<label for="shareEmail">Your Email Address</label>
<input name="uc_2$ctl02$shareEmail" type="text" id="shareEmail" class="lo_sensitive placeholder email" autofocus="">
<span class="message placeholder email"></span>
</div>
</fieldset>
<fieldset class="email right">
<div>
<label for="shareEmailRecipient">Recipient Email Address</label>
<input type="text" ng-model="EmailRecipient" id="shareEmailRecipient" name="emailIdRecipient" class="email ng-pristine ng-untouched ng-empty ng-invalid ng-invalid-required" required="">
<span class="message email error ng-hide" id="emailValid" ng-show="isRecFormatWrong">Please enter valid address</span>
<span class="message email error ng-hide" id="emailRequired" ng-show="isRecipientRequired">Email address is required</span>
</div>
</fieldset>
<fieldset class="textarea">
<div>
<label for="optMessageShare">Optional Message</label>
</div>
<div>
<textarea id="optMessageShare" rows="3" ng-model="Emailmessage" class="messageShare ng-pristine ng-untouched ng-valid ng-empty" name="optMessageShare"></textarea>
</div>
</fieldset>
<fieldset>
<div class="g-recaptcha" data-sitekey="6LcjvzEUAAAAAOaJ1VpNhD3KZPBP5_PfDVWDriB2">
<div style="width: 304px; height: 78px;">
<div><iframe title="reCAPTCHA" width="304" height="78" role="presentation" name="a-s2h182kwojps" frameborder="0" scrolling="no"
sandbox="allow-forms allow-popups allow-same-origin allow-scripts allow-top-navigation allow-modals allow-popups-to-escape-sandbox"
src="https://www.google.com/recaptcha/api2/anchor?ar=1&k=6LcjvzEUAAAAAOaJ1VpNhD3KZPBP5_PfDVWDriB2&co=aHR0cHM6Ly93d3cucGltY28uY29tOjQ0Mw..&hl=en&v=lLirU0na9roYU3wDDisGJEVT&size=normal&cb=h76plvfbt0rq"></iframe>
</div><textarea id="g-recaptcha-response" name="g-recaptcha-response" class="g-recaptcha-response"
style="width: 250px; height: 40px; border: 1px solid rgb(193, 193, 193); margin: 10px 25px; padding: 0px; resize: none; display: none;"></textarea>
</div><iframe style="display: none;"></iframe>
</div>
</fieldset>
<fieldset>
<input type="text" id="EmailAgreement" style="display: none;" title="Email - Please ignore">
<button class="myContentShareButton button button-blue" type="button" ng-click="submitMailForm()">Send Email</button>
</fieldset>
</section>
<div class="mycontentShareList ">
<h3 ng-show="shareFilterList.length ===1" class="ng-hide">You are sharing <span class="mycontentShareCount ng-binding">0</span>
<span class="mycontentShareText">items</span>:
</h3>
<h3 ng-show="shareFilterList.length > 1" class="ng-hide">You are sharing <span class="mycontentShareCount ng-binding">0</span>
<span class="mycontentShareText">items</span>:
</h3>
<div><span class="message shareAmount"></span></div>
<section class="myContentFilterList">
<div>
<!-- ngRepeat: myContentItem in (shareListItems | mycontentCategory:filterDropDown) as shareFilterList track by $index -->
</div>
</section>
</div>
<div class="quickLinks">
<ul>
<li class="account">
<a title="My Profile" href="/en-us/account/update">My Profile</a>
</li>
<li class="order_materials"><a href="#" ng-click="filterMyContentItems('order_materials')">Order Materials</a></li>
<li class="Subscriptions">
<a href="javascript:void(0);" fb-href="https://subscriptions.pimco.com?tk=r3GaXNTsrViWcABgAd-6dqgmr-s1v5Q6sOTXvd-30e1W_9daw9VpDNaymd-YAxt5OK1s7ohfVXC6YNy7bcH3rx4-1F_C8JInjWVrQOQxMPX-VtsMYO11eeH02AX2a04ZigMdew9Az3glLTRPt424eA2" pimco-fancy-box="" fb-type="iframe" fb-height="80%" fb-width="90%" class="ng-isolate-scope">Manage Subscriptions</a>
</li>
<li class="hypo" id="plMorningstar_item">
<a href="/en-us/sitecore/content/modules/website-content/morningstar-hypothetical-tool/morningstar-hypothetical-tool">Morningstar® Hypothetical Tool<span class="sr-only">locked</span><span class="lockIcon locked"></span></a></li>
</ul>
</div>
<div tabindex="0" class="sr-only" id="saveContentLast"></div>
</div>
</div>
<div ng-controller="fancyBoxCtrl" class="ng-scope"></div>
</section>
<script type="text/ng-template" id="myContentFancyClose.html"> <div style="margin:10px;">
{{FancyBoxMessage}}
<div style="text-align:center;margin-top:10px;">
<input class="button button-blue" type="button" ng-click="showMyContent();" value="{{FancyBoxMyContentBtn}}">
</div>
<div style="text-align:center;margin-top:10px;">
<input class="button button-blue" type="button" ng-click="close('showHideMyContent');" value="{{FancyBoxCloseBtn}}">
</div>
</div>
</script>
<script type="text/ng-template" id="myContentSubmitOrder.html"> <div style="margin:10px;">
{{submitOrder}}
<div style="text-align:center;margin-top:10px;">
<input class="button button-blue" type="button" ng-click="closeSubmitOrderFancyBox();" value="{{submitOrderOk}}">
</div>
</div>
</script>
<script>
$(document).ready(function() {
setTimeout(function() {
$.ajax({
url: "/data/MyContent/GetMorningstarLink/",
type: "GET",
success: function(data) {
if (data.Data.Result != null || data.Data.Result !== undefined) {
var target = $("#plMorningstar_item");
target.append(data.Data.Result);
}
},
error: function(err) {
console.log(err);
}
});
}, 500); //dont remove as this is to insure that the call get place last in event queue
});
</script>
<div class="aspNetHidden">
<input type="hidden" name="__VIEWSTATEGENERATOR" id="__VIEWSTATEGENERATOR" value="E4829E83">
<input type="hidden" name="__EVENTVALIDATION" id="__EVENTVALIDATION" value="cMk4ujEvuOc+kSg5SG1bh6oumoNRs8QwGc9bL8Kr06BNr996zR+wngs1XwWcXjCppogQ8s/SM8Zjn5N3gHtWzWz3en81RA1PW37bpaQpZh+UruVAp1QiUy9n514yBO/KXpswyw==">
</div>
<section id="content">
<div id="main">
<div class="aspNetHidden">
<input type="hidden" name="__VIEWSTATE" id="__VIEWSTATE" value="I07VfLeoo3eO/AzoM8cuypKrGif8kK7sJVjcK/1sVHxnkkPtp8LmEc8xzrVZRMPOeAlhBA==">
</div>
<div class="breadcrumb no-print">
<a href="/">Home</a> <span>></span>
<a href="/en-us/insights">Insights</a> <span>></span>
<a href="/en-us/insights/blog">Blog</a> <span>></span> BOJ Moves Toward Phasing Out Yield Curve Control
</div>
<div class="aspNetHidden">
<input type="hidden" name="__VIEWSTATEGENERATOR" id="__VIEWSTATEGENERATOR" value="E4829E83">
</div>
<form method="post" action="boj-moves-toward-phasing-out-yield-curve-control" id="ctl00" class="ng-pristine ng-valid">
<div class="aspNetHidden">
<input type="hidden" name="__VIEWSTATE" id="__VIEWSTATE" value="vRab9zRq8PI54SbEwiRvNkryKKDljRexMHt5LwYWt/HkFQ0IYoUj6E+KrwM67tz30USLQA==">
</div>
<div id="uc_4_ctl02_pnlNoFigure" class="no-figure-color-block">
</div>
<div class="aspNetHidden">
<input type="hidden" name="__VIEWSTATEGENERATOR" id="__VIEWSTATEGENERATOR" value="E4829E83">
</div>
</form>
<section class="colFullWidth">
<form method="post" action="boj-moves-toward-phasing-out-yield-curve-control" id="ctl00" class="ng-pristine ng-valid">
<div class="aspNetHidden">
<input type="hidden" name="__VIEWSTATE" id="__VIEWSTATE" value="t/HVC9yLA7D7afRof4iVetWp4EFoynleMp79Z7Zn7QXJabt6NMJvIwvb9ZLm2UdPxOjIBw==">
</div>
<article>
<i data-pua="e609" class="icomoon article-theme icon-blog"></i>
<a class="section articleType" href="/en-us/insights/blog">Blog</a>
<header>
<h1>BOJ Moves Toward Phasing Out Yield Curve Control</h1>
</header>
<p id="articleIntroduction">The Bank of Japan announced changes that could allow its yield curve control program to expire gradually, if economic conditions are favorable.</p>
<footer> By <a href="/en-us/experts/tomoya-masanao" class="" rel="author">Tomoya Masanao</a>
<time id="uc_5_ctl02_tArticleDate">July 28, 2023</time>
</footer>
</article>
<div class="aspNetHidden">
<input type="hidden" name="__VIEWSTATEGENERATOR" id="__VIEWSTATEGENERATOR" value="E4829E83">
</div>
</form>
</section>
<section class="layoutTable3Col">
<div class="layColLeft">
<form method="post" action="boj-moves-toward-phasing-out-yield-curve-control" id="ctl00" class="ng-pristine ng-valid">
<div class="aspNetHidden">
<input type="hidden" name="__VIEWSTATE" id="__VIEWSTATE" value="Pv/j1T1HdL+tQGxU7XtZNRBe+96TtVHCEWisR4w84fImmiEKwRmGAEI9+vwCYV/27YIhjA==">
</div>
<div class="aspNetHidden">
<input type="hidden" name="__VIEWSTATEGENERATOR" id="__VIEWSTATEGENERATOR" value="E4829E83">
</div>
</form>
<form method="post" action="boj-moves-toward-phasing-out-yield-curve-control" id="ctl00" class="ng-pristine ng-valid">
<div class="aspNetHidden">
<input type="hidden" name="__VIEWSTATE" id="__VIEWSTATE" value="V810e/JNnbMWHAL5hMDrJ0xuqLxTbOqwUmI9HshMi5BajOSOOhCKOvKgGum4ms5MmLza7w==">
</div>
<div data-controller-require="./controllers/shareIconsCtrl" ng-controller="ShareIconsCtrl" data-render-breakpoints="mobile,tablet,desktop" class="component cShareIcons immediateLoad ng-scope"
data-id="163A1AB555444A2F95644496B01EF9CF">
<span class="utilityIconsStart"></span>
<div class="shareIconsWrapper no-print">
<ul class="articleUtilityIcons cf">
<li class="share" ng-keydown="showShareOverlay($event)" ng-click="showShareOverlay($event)">
<div ng-blur="removeShareOverlay($event)" id="shareButton" class="pimcon-round-button" tabindex="0" role="link" aria-expanded="false">
<span aria-hidden="true"><i data-pua="e600" class="icomoon icon-pimcoshare"></i></span>
<span class="sr-only">Share</span>
</div>
<div class="utilityIcons">
<span aria-hidden="true">Share</span>
</div>
<div class="share-icons-overlay" data-title="BOJ%20Moves%20Toward%20Phasing%20Out%20Yield%20Curve%20Control" data-summary="" data-source="" data-url="https://www.pimco.com/en-us/92hm50vd4lzv">
<ul>
<li class="linkedin">
<a ng-blur="removeShareOverlay($event)" href="javascript:void(0);" ng-click="shareThis("linkedin","https://www.pimco.com/en-us/92hm50vd4lzv","BOJ%20Moves%20Toward%20Phasing%20Out%20Yield%20Curve%20Control", $event)" target="_blank">
<span aria-hidden="true"><i data-pua="e65c" class="icomoon icon-linkedin2 pimcon-article-share"></i></span>
<span class="sr-only">Share via LinkedIn</span>
</a>
</li>
<li class="facebook">
<a ng-blur="removeShareOverlay($event)" href="javascript:void(0);" ng-click="shareThis("facebook","https://www.pimco.com/en-us/92hm50vd4lzv","BOJ%20Moves%20Toward%20Phasing%20Out%20Yield%20Curve%20Control", $event)" target="_blank">
<span aria-hidden="true"><i data-pua="e632" class="icomoon icon-facebook pimcon-article-share"></i></span>
<span class="sr-only">Share via Facebook</span>
</a>
</li>
<li class="twitter">
<a ng-blur="removeShareOverlay($event)" href="javascript:void(0);" ng-click="shareThis("twitter","https://www.pimco.com/en-us/92hm50vd4lzv","BOJ%20Moves%20Toward%20Phasing%20Out%20Yield%20Curve%20Control", $event)" target="_blank">
<span aria-hidden="true"><i data-pua="e633" class="icomoon icon-twitter pimcon-article-share"></i></span>
<span class="sr-only">Share via Twitter</span>
</a>
</li>
<li class="my-content-share">
<a ng-blur="removeShareOverlay($event)" href="javascript:void(0);" class="share" onclick="return false" id="shareMyContent" ng-click="shareContentByEmail()" data-add-mycontent="163A1AB555444A2F95644496B01EF9CF">
<span aria-hidden="true"><i data-pua="e605" class="icomoon icon-email pimcon-article-share"></i></span>
<span class="sr-only">Share via Email</span>
</a>
</li>
</ul>
</div>
</li>
<li pimco-add-content="" class="add">
<div class="pimcon-round-button" tabindex="0" role="link">
<span aria-hidden="true"><i data-pua="e601" class="icomoon icon-addcontent"></i></span>
<span class="sr-only">Add</span>
</div>
<div class="utilityIcons" pimco-add-content="" data-add-mycontent="163A1AB555444A2F95644496B01EF9CF">
<span aria-hidden="true">Add</span>
</div>
</li>
<li pimco-download-content="" class="download">
<div class="pimcon-round-button" tabindex="0" role="link">
<span aria-hidden="true"><i data-pua="e603" class="icomoon icon-pdf"></i></span>
<span class="sr-only">Download</span>
</div>
<div class="utilityIcons">
<span aria-hidden="true">Download</span>
</div>
</li>
<li pimco-print-content="" class="print">
<div class="pimcon-round-button" tabindex="0" role="link">
<span aria-hidden="true"><i data-pua="e602" class="icomoon icon-pimcoprint"></i></span>
<span class="sr-only">Print</span>
</div>
<div class="utilityIcons">
<span aria-hidden="true">Print</span>
</div>
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<p><span class="accentLetter">J</span>uly’s monetary policy meeting could well be remembered as the moment the Bank of Japan (BOJ) began phasing out its seven-year-old yield curve control (YCC) program, or at least took a major step
toward an eventual exit. In our view, the changes in YCC could help the program phase out gradually as the conditions that prompted its creation (persistent low inflation and low growth) also diminish, without prompting a
disruptive rise in yields. We also do not expect a significant adverse impact on global financial markets from the YCC changes.</p>
<p>The BOJ said it is making YCC more flexible while maintaining the 0% target yield level for 10-year Japanese government bonds (JGBs). One major policy change is that the plus and minus 0.5 percentage points around zero will no
longer be “rigid limits” but instead “references” in the bank’s market operations. The bank also raised the target level at which it would conduct a fixed-rate JGB purchase operation every business day, from 0.5% to 1.0% on
10-year JGBs.</p>
<p>By way of background, the BOJ’s YCC was introduced in September 2016, eight months after the bank surprised markets by lowering its short-term policy rate to −0.1%. Then, in July 2018, the bank defined plus and minus 0.2% as
limits for 10-year JGB yields. Further tweaks to the yield target band were made to pursue flexibility and sustainability of YCC: plus and minus 0.25% in March 2021 and plus and minus 0.5% in December 2022.</p>
<h2>A phaseout of YCC would help mitigate its inherent problems</h2>
<p>YCC has posed both benefits and drawbacks. The BOJ’s unique policy tool has been powerful in helping suppress long-term real market rates well below real neutral rates, contributing to depreciation of the Japanese yen, helping
ease financial conditions broadly, and hence stimulating overall economic demand.</p>
<p>However, one issue with YCC’s design is that it could become too stimulative once the BOJ’s 2% inflation target actually comes into sight: Real rates would tend to shift even lower with 10-year nominal yields capped and inflation
expectations rising, suggesting the policy should indeed be adjusted so it is less stimulative, not more. This “procyclicality” is an inherent problem with YCC, and July’s BOJ statement suggests that mitigating this problem is the
bank’s main motivation for its decision:</p>
<p style="margin-left: 40px;"><em>“Japan’s recent inflation rates … are higher than projected in the April 2023 Outlook Report, and wage growth has risen …. If upward movements in prices continue, the effects of monetary easing will
strengthen through a decline in real interest rates ….”</em></p>
<p>As time passes and circumstances change, policies that once appeared appropriate often must adapt. What economists call “time inconsistency” can be disruptive for the markets and economy, and potentially damage a central bank’s
credibility. BOJ Governor Kazuo Ueda had mentioned this in relation to YCC prior to becoming the central bank chief in April, and at the press conference following July’s meeting he again raised potential issues around the
procyclicality of YCC.</p>
<p>The BOJ’s risk assessment and narratives on its inflation outlook support the changes made to the YCC program. In the July 2023 Outlook Report, though the bank’s forecast for consumer price index (CPI) inflation excluding fresh
food was slightly lowered to 1.9% year-over-year for fiscal 2024 and kept unchanged at 1.6% for fiscal 2025, the bank notes upside risk for 2024 inflation and removed a downside risk narrative from its 2025 forecast.</p>
<h2>An elegantly designed phaseout</h2>
<p>Keeping the 0% target for 10-year JGBs with plus and minus 0.5% references (no longer rigid limits) and the new 1% upper limit is an elegantly designed phaseout for the YCC, in our view.</p>
<p>The limited history of central banks exiting rate cap policies suggests this move can be disruptive. Governor Ueda noted the examples of the U.S. Federal Reserve (Fed) in 1951 and the Reserve Bank of Australia (RBA) in 2021.</p>
<p>The seemingly complicated new design for the BOJ’s YCC could be much less disruptive; we believe the BOJ may have addressed the procyclicality challenge before it becomes unmanageable. The BOJ would allow (or even welcome)
10-year JGB yields rising above 0.5%, as long as the nominal yield rise is due to higher inflation expectations consistent with the 2% inflation target and/or a healthy rise in real rates that reflects stronger economic growth.
Under those conditions, the YCC program could automatically be phased out with little disruption to the markets and real economy. Or, in an adverse economic scenario where inflation rates decline and do not rise again to the 2%
target, the YCC program could simply continue and suppress yields lower as needed.</p>
<p>In essence, with July’s announcement we believe the BOJ has likely succeeded in limiting the risk of its policy being procyclical and disruptive in a successful inflation scenario, while retaining the powerful easing tool with
the same yield target for an unwelcome back-to-deflation scenario.</p>
<h2>Short-term policy rate unchanged</h2>
<p>The BOJ kept its short-term policy rate unchanged at −0.1%. The bank likely needs more data to become confident that its 2% inflation target has been met in a sustainable and stable manner (a condition for its forward guidance)
before considering a change. However, the market may start testing the BOJ on the short-term policy rate before too long. Inflation dynamics seem to be changing, even in Japan.</p>
<h2>Bottom line</h2>
<p>July’s BOJ decisions could likely turn out to be a phaseout of YCC. The bank would allow JGB yields to rise, if gradual and consistent with growth and inflation, with the new cap at 1.0%.</p>
<p>One concern is whether JGB yields could reach 1% too soon, with momentum to rise further. We believe JGB yields will likely stay contained: If yields were to rise anywhere close to 1%, we would expect strong domestic demand for
Japan duration would be enough to hold yields at that level for now – at least until the BOJ’s 2% inflation target is finally met.</p>
<p>We also do not expect a significant adverse spillover to global financial markets from the BOJ’s YCC changes. Many Japanese investors have already offloaded a large quantity of foreign bonds as their currency hedging costs rose
with the U.S. Fed and other central banks hiking their policy rates. This should help limit additional appetite for domestic investors to sell foreign bonds to buy Japanese bonds.</p>
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<h5>The Author</h5>
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<img src="/-/media/global-assets/experts/m/tomoya-masanao/pimco_masanao_tomoya_274x135.ashx?vs=1&sc_lang=en-us&d=20180823110916&hash=D6B2E40A04F28BC7082426C1D6FA8958" class="lazyimage"
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<section>
<h1>Tomoya Masanao</h1>
<p>Co-Head of Asia-Pacific Portfolio Management, Co-Head of PIMCO Japan</p>
<a href="/en-us/experts/tomoya-masanao" id="uc_11_ctl02_rptSingleExpert_viewProfileLink_0" class="button button-white author-link" data-name="Tomoya Masanao">View Profile</a>
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<a href="/en-us/insights/viewpoints?section=Viewpoints" class="section perspectives">Viewpoints</a>
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<p> “Restrictive for longer” is now the mantra as monetary policymakers seek to bring inflation reliably to target. </p>
<footer>
<a class="author-link" rel="author" href="/en-us/experts/richard-clarida">Richard Clarida</a>
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<time>October 2023</time>
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<p> Public credit markets offer high quality investments with attractive yields and downside resilience, while we see growing longer-term opportunities in private markets. </p>
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<a class="article-link" data-category="Blog" data-article="Fed Seems Confident in Soft Landing, But We See Risks" href="/en-us/insights/blog/fed-seems-confident-in-soft-landing-but-we-see-risks">
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<p> The Federal Reserve forecasts only a modest uptick in U.S. unemployment next year as inflation cools, but history and current labor market trends make us less certain. </p>
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<a class="author-link" rel="author" href="/en-us/experts/tiffany-wilding">Tiffany Wilding</a>, <a class="author-link" rel="author" href="/en-us/experts/allison-boxer">Allison Boxer</a>
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<h1>Monthly Municipal Market Update, August 2023</h1>
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<a class="article-link" data-category="Blog" data-article="ECB Prioritizes Fighting Inflation Above Avoiding Recession" href="/en-us/insights/blog/ecb-prioritizes-fighting-inflation-above-avoiding-recession">
<h1>ECB Prioritizes Fighting Inflation Above Avoiding Recession</h1>
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<p> The European Central Bank is likely at or very near its peak policy rate, but we don’t expect rate cuts in the near term. </p>
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<a class="author-link" rel="author" href="/en-us/experts/konstantin-veit">Konstantin Veit</a>
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<h1>Shifting Macro Trends in the Aftershock Economy</h1>
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<p> PIMCO’s Global Advisory Board discusses economic and geopolitical factors shaping the long-term global outlook. </p>
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<h1>Local Government Financing Vehicles: A Growing Risk for China’s Economy?</h1>
</a>
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<p> We believe idiosyncratic credit events may occur over the next 12 months, but systemic bank risk is remote. </p>
<footer>
<a class="author-link" rel="author" href="/en-us/experts/alex-zhou">Alex Zhou</a>, <a class="author-link" rel="author" href="/en-us/experts/annisa-lee">Annisa Lee</a>,
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<a href="/en-us/insights/viewpoints/major-central-banks-maintain-hard-line-stance-on-inflation" tabindex="-1">
<img lazysrc="/-/media/global-assets/insights/viewpoints/viewpoints/2023/10/pimco_viewpoints_clarida_oct2023_480x270_3755809.ashx?vs=1&sc_lang=en-us&d=20231003193129&hash=218D8B40319E749C1B7CD9135BBEA436" src="/-/media/global-assets/insights/viewpoints/viewpoints/2023/10/pimco_viewpoints_clarida_oct2023_480x270_3755809.ashx?vs=1&sc_lang=en-us&d=20231003193129&hash=218D8B40319E749C1B7CD9135BBEA436" class="lazyimage" alt="Major Central Banks Maintain Hard-Line Stance on Inflation">
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<a class="article-link" data-category="Viewpoints" data-article="Major Central Banks Maintain Hard-Line Stance on Inflation" href="/en-us/insights/viewpoints/major-central-banks-maintain-hard-line-stance-on-inflation">
<h1>Major Central Banks Maintain Hard‑Line Stance on Inflation</h1>
</a>
</header>
<p> “Restrictive for longer” is now the mantra as monetary policymakers seek to bring inflation reliably to target. </p>
<footer>
<a class="author-link" rel="author" href="/en-us/experts/richard-clarida">Richard Clarida</a>
<div class="date-block">
<time>October 2023</time>
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<a href="/en-us/insights/blog/fed-seems-confident-in-soft-landing-but-we-see-risks" tabindex="-1">
<img lazysrc="/-/media/global-assets/insights/blog/2023/09/pimco_blog_wilding_boxer_480x270_66016.ashx?vs=1&sc_lang=en-us&d=20230921013737&hash=7DAF49371296A19826608B48CA583B88" src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" class="lazyimage" alt="Fed Seems Confident in Soft Landing, But We See Risks ">
</a>
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<header>
<a class="article-link" data-category="Blog" data-article="Fed Seems Confident in Soft Landing, But We See Risks" href="/en-us/insights/blog/fed-seems-confident-in-soft-landing-but-we-see-risks">
<h1>Fed Seems Confident in Soft Landing, But We See Risks</h1>
</a>
</header>
<p> The Federal Reserve forecasts only a modest uptick in U.S. unemployment next year as inflation cools, but history and current labor market trends make us less certain. </p>
<footer>
<a class="author-link" rel="author" href="/en-us/experts/tiffany-wilding">Tiffany Wilding</a>, <a class="author-link" rel="author" href="/en-us/experts/allison-boxer">Allison Boxer</a>
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<time>September 2023</time>
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<a href="/en-us/insights/blog/ecb-prioritizes-fighting-inflation-above-avoiding-recession" tabindex="-1">
<img lazysrc="/-/media/global-assets/insights/blog/2023/09/pimco_blog_veit_sep2023_480x270_2699316.ashx?vs=1&sc_lang=en-us&d=20230914200442&hash=BE6BEE104D4D9F7C8C52737FDBC2338D" src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" class="lazyimage" alt="ECB Prioritizes Fighting Inflation Above Avoiding Recession">
</a>
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<header>
<a class="article-link" data-category="Blog" data-article="ECB Prioritizes Fighting Inflation Above Avoiding Recession" href="/en-us/insights/blog/ecb-prioritizes-fighting-inflation-above-avoiding-recession">
<h1>ECB Prioritizes Fighting Inflation Above Avoiding Recession</h1>
</a>
</header>
<p> The European Central Bank is likely at or very near its peak policy rate, but we don’t expect rate cuts in the near term. </p>
<footer>
<a class="author-link" rel="author" href="/en-us/experts/konstantin-veit">Konstantin Veit</a>
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<p id="articleIntroduction">The Bank of Japan announced changes that could allow its yield curve control program to expire gradually, if economic conditions are favorable.</p>
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<p><span class="accentLetter">J</span>uly’s monetary policy meeting could well be remembered as the moment the Bank of Japan (BOJ) began phasing out its seven-year-old yield curve control (YCC) program, or at least took a major step toward an
eventual exit. In our view, the changes in YCC could help the program phase out gradually as the conditions that prompted its creation (persistent low inflation and low growth) also diminish, without prompting a disruptive rise in yields. We also
do not expect a significant adverse impact on global financial markets from the YCC changes.</p>
<p>The BOJ said it is making YCC more flexible while maintaining the 0% target yield level for 10-year Japanese government bonds (JGBs). One major policy change is that the plus and minus 0.5 percentage points around zero will no longer be “rigid
limits” but instead “references” in the bank’s market operations. The bank also raised the target level at which it would conduct a fixed-rate JGB purchase operation every business day, from 0.5% to 1.0% on 10-year JGBs.</p>
<p>By way of background, the BOJ’s YCC was introduced in September 2016, eight months after the bank surprised markets by lowering its short-term policy rate to −0.1%. Then, in July 2018, the bank defined plus and minus 0.2% as limits for 10-year
JGB yields. Further tweaks to the yield target band were made to pursue flexibility and sustainability of YCC: plus and minus 0.25% in March 2021 and plus and minus 0.5% in December 2022.</p>
<h2>A phaseout of YCC would help mitigate its inherent problems</h2>
<p>YCC has posed both benefits and drawbacks. The BOJ’s unique policy tool has been powerful in helping suppress long-term real market rates well below real neutral rates, contributing to depreciation of the Japanese yen, helping ease financial
conditions broadly, and hence stimulating overall economic demand.</p>
<p>However, one issue with YCC’s design is that it could become too stimulative once the BOJ’s 2% inflation target actually comes into sight: Real rates would tend to shift even lower with 10-year nominal yields capped and inflation expectations
rising, suggesting the policy should indeed be adjusted so it is less stimulative, not more. This “procyclicality” is an inherent problem with YCC, and July’s BOJ statement suggests that mitigating this problem is the bank’s main motivation for
its decision:</p>
<p style="margin-left: 40px;"><em>“Japan’s recent inflation rates … are higher than projected in the April 2023 Outlook Report, and wage growth has risen …. If upward movements in prices continue, the effects of monetary easing will strengthen
through a decline in real interest rates ….”</em></p>
<p>As time passes and circumstances change, policies that once appeared appropriate often must adapt. What economists call “time inconsistency” can be disruptive for the markets and economy, and potentially damage a central bank’s credibility. BOJ
Governor Kazuo Ueda had mentioned this in relation to YCC prior to becoming the central bank chief in April, and at the press conference following July’s meeting he again raised potential issues around the procyclicality of YCC.</p>
<p>The BOJ’s risk assessment and narratives on its inflation outlook support the changes made to the YCC program. In the July 2023 Outlook Report, though the bank’s forecast for consumer price index (CPI) inflation excluding fresh food was slightly
lowered to 1.9% year-over-year for fiscal 2024 and kept unchanged at 1.6% for fiscal 2025, the bank notes upside risk for 2024 inflation and removed a downside risk narrative from its 2025 forecast.</p>
<h2>An elegantly designed phaseout</h2>
<p>Keeping the 0% target for 10-year JGBs with plus and minus 0.5% references (no longer rigid limits) and the new 1% upper limit is an elegantly designed phaseout for the YCC, in our view.</p>
<p>The limited history of central banks exiting rate cap policies suggests this move can be disruptive. Governor Ueda noted the examples of the U.S. Federal Reserve (Fed) in 1951 and the Reserve Bank of Australia (RBA) in 2021.</p>
<p>The seemingly complicated new design for the BOJ’s YCC could be much less disruptive; we believe the BOJ may have addressed the procyclicality challenge before it becomes unmanageable. The BOJ would allow (or even welcome) 10-year JGB yields
rising above 0.5%, as long as the nominal yield rise is due to higher inflation expectations consistent with the 2% inflation target and/or a healthy rise in real rates that reflects stronger economic growth. Under those conditions, the YCC
program could automatically be phased out with little disruption to the markets and real economy. Or, in an adverse economic scenario where inflation rates decline and do not rise again to the 2% target, the YCC program could simply continue and
suppress yields lower as needed.</p>
<p>In essence, with July’s announcement we believe the BOJ has likely succeeded in limiting the risk of its policy being procyclical and disruptive in a successful inflation scenario, while retaining the powerful easing tool with the same yield
target for an unwelcome back-to-deflation scenario.</p>
<h2>Short-term policy rate unchanged</h2>
<p>The BOJ kept its short-term policy rate unchanged at −0.1%. The bank likely needs more data to become confident that its 2% inflation target has been met in a sustainable and stable manner (a condition for its forward guidance) before
considering a change. However, the market may start testing the BOJ on the short-term policy rate before too long. Inflation dynamics seem to be changing, even in Japan.</p>
<h2>Bottom line</h2>
<p>July’s BOJ decisions could likely turn out to be a phaseout of YCC. The bank would allow JGB yields to rise, if gradual and consistent with growth and inflation, with the new cap at 1.0%.</p>
<p>One concern is whether JGB yields could reach 1% too soon, with momentum to rise further. We believe JGB yields will likely stay contained: If yields were to rise anywhere close to 1%, we would expect strong domestic demand for Japan duration
would be enough to hold yields at that level for now – at least until the BOJ’s 2% inflation target is finally met.</p>
<p>We also do not expect a significant adverse spillover to global financial markets from the BOJ’s YCC changes. Many Japanese investors have already offloaded a large quantity of foreign bonds as their currency hedging costs rose with the U.S. Fed
and other central banks hiking their policy rates. This should help limit additional appetite for domestic investors to sell foreign bonds to buy Japanese bonds.</p>
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<h5>The Author</h5>
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<h1>Tomoya Masanao</h1>
<p>Co-Head of Asia-Pacific Portfolio Management, Co-Head of PIMCO Japan</p>
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<a class="author-link" rel="author" href="/en-us/experts/richard-clarida">Richard Clarida</a>
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<p> The Federal Reserve forecasts only a modest uptick in U.S. unemployment next year as inflation cools, but history and current labor market trends make us less certain. </p>
<footer>
<a class="author-link" rel="author" href="/en-us/experts/tiffany-wilding">Tiffany Wilding</a>, <a class="author-link" rel="author" href="/en-us/experts/allison-boxer">Allison Boxer</a>
<div class="date-block">
<time>September 2023</time>
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<a href="/en-us/insights/blog" class="section blog">Blog</a>
<figure>
<a href="/en-us/insights/blog/ecb-prioritizes-fighting-inflation-above-avoiding-recession" tabindex="-1">
<img lazysrc="/-/media/global-assets/insights/blog/2023/09/pimco_blog_veit_sep2023_480x270_2699316.ashx?vs=1&sc_lang=en-us&d=20230914200442&hash=BE6BEE104D4D9F7C8C52737FDBC2338D" src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" class="lazyimage" alt="ECB Prioritizes Fighting Inflation Above Avoiding Recession">
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<a class="article-link" data-category="Blog" data-article="ECB Prioritizes Fighting Inflation Above Avoiding Recession" href="/en-us/insights/blog/ecb-prioritizes-fighting-inflation-above-avoiding-recession">
<h1>ECB Prioritizes Fighting Inflation Above Avoiding Recession</h1>
</a>
</header>
<p> The European Central Bank is likely at or very near its peak policy rate, but we don’t expect rate cuts in the near term. </p>
<footer>
<a class="author-link" rel="author" href="/en-us/experts/konstantin-veit">Konstantin Veit</a>
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<time>September 2023</time>
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Home > Insights > Blog > BOJ Moves Toward Phasing Out Yield Curve Control
Blog
BOJ MOVES TOWARD PHASING OUT YIELD CURVE CONTROL
The Bank of Japan announced changes that could allow its yield curve control
program to expire gradually, if economic conditions are favorable.
By Tomoya Masanao July 28, 2023
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July’s monetary policy meeting could well be remembered as the moment the Bank
of Japan (BOJ) began phasing out its seven-year-old yield curve control (YCC)
program, or at least took a major step toward an eventual exit. In our view, the
changes in YCC could help the program phase out gradually as the conditions that
prompted its creation (persistent low inflation and low growth) also diminish,
without prompting a disruptive rise in yields. We also do not expect a
significant adverse impact on global financial markets from the YCC changes.
The BOJ said it is making YCC more flexible while maintaining the 0% target
yield level for 10-year Japanese government bonds (JGBs). One major policy
change is that the plus and minus 0.5 percentage points around zero will no
longer be “rigid limits” but instead “references” in the bank’s market
operations. The bank also raised the target level at which it would conduct a
fixed-rate JGB purchase operation every business day, from 0.5% to 1.0% on
10-year JGBs.
By way of background, the BOJ’s YCC was introduced in September 2016, eight
months after the bank surprised markets by lowering its short-term policy rate
to −0.1%. Then, in July 2018, the bank defined plus and minus 0.2% as limits for
10-year JGB yields. Further tweaks to the yield target band were made to pursue
flexibility and sustainability of YCC: plus and minus 0.25% in March 2021 and
plus and minus 0.5% in December 2022.
A PHASEOUT OF YCC WOULD HELP MITIGATE ITS INHERENT PROBLEMS
YCC has posed both benefits and drawbacks. The BOJ’s unique policy tool has been
powerful in helping suppress long-term real market rates well below real neutral
rates, contributing to depreciation of the Japanese yen, helping ease financial
conditions broadly, and hence stimulating overall economic demand.
However, one issue with YCC’s design is that it could become too stimulative
once the BOJ’s 2% inflation target actually comes into sight: Real rates would
tend to shift even lower with 10-year nominal yields capped and inflation
expectations rising, suggesting the policy should indeed be adjusted so it is
less stimulative, not more. This “procyclicality” is an inherent problem with
YCC, and July’s BOJ statement suggests that mitigating this problem is the
bank’s main motivation for its decision:
“Japan’s recent inflation rates … are higher than projected in the April 2023
Outlook Report, and wage growth has risen …. If upward movements in prices
continue, the effects of monetary easing will strengthen through a decline in
real interest rates ….”
As time passes and circumstances change, policies that once appeared appropriate
often must adapt. What economists call “time inconsistency” can be disruptive
for the markets and economy, and potentially damage a central bank’s
credibility. BOJ Governor Kazuo Ueda had mentioned this in relation to YCC prior
to becoming the central bank chief in April, and at the press conference
following July’s meeting he again raised potential issues around the
procyclicality of YCC.
The BOJ’s risk assessment and narratives on its inflation outlook support the
changes made to the YCC program. In the July 2023 Outlook Report, though the
bank’s forecast for consumer price index (CPI) inflation excluding fresh food
was slightly lowered to 1.9% year-over-year for fiscal 2024 and kept unchanged
at 1.6% for fiscal 2025, the bank notes upside risk for 2024 inflation and
removed a downside risk narrative from its 2025 forecast.
AN ELEGANTLY DESIGNED PHASEOUT
Keeping the 0% target for 10-year JGBs with plus and minus 0.5% references (no
longer rigid limits) and the new 1% upper limit is an elegantly designed
phaseout for the YCC, in our view.
The limited history of central banks exiting rate cap policies suggests this
move can be disruptive. Governor Ueda noted the examples of the U.S. Federal
Reserve (Fed) in 1951 and the Reserve Bank of Australia (RBA) in 2021.
The seemingly complicated new design for the BOJ’s YCC could be much less
disruptive; we believe the BOJ may have addressed the procyclicality challenge
before it becomes unmanageable. The BOJ would allow (or even welcome) 10-year
JGB yields rising above 0.5%, as long as the nominal yield rise is due to higher
inflation expectations consistent with the 2% inflation target and/or a healthy
rise in real rates that reflects stronger economic growth. Under those
conditions, the YCC program could automatically be phased out with little
disruption to the markets and real economy. Or, in an adverse economic scenario
where inflation rates decline and do not rise again to the 2% target, the YCC
program could simply continue and suppress yields lower as needed.
In essence, with July’s announcement we believe the BOJ has likely succeeded in
limiting the risk of its policy being procyclical and disruptive in a successful
inflation scenario, while retaining the powerful easing tool with the same yield
target for an unwelcome back-to-deflation scenario.
SHORT-TERM POLICY RATE UNCHANGED
The BOJ kept its short-term policy rate unchanged at −0.1%. The bank likely
needs more data to become confident that its 2% inflation target has been met in
a sustainable and stable manner (a condition for its forward guidance) before
considering a change. However, the market may start testing the BOJ on the
short-term policy rate before too long. Inflation dynamics seem to be changing,
even in Japan.
BOTTOM LINE
July’s BOJ decisions could likely turn out to be a phaseout of YCC. The bank
would allow JGB yields to rise, if gradual and consistent with growth and
inflation, with the new cap at 1.0%.
One concern is whether JGB yields could reach 1% too soon, with momentum to rise
further. We believe JGB yields will likely stay contained: If yields were to
rise anywhere close to 1%, we would expect strong domestic demand for Japan
duration would be enough to hold yields at that level for now – at least until
the BOJ’s 2% inflation target is finally met.
We also do not expect a significant adverse spillover to global financial
markets from the BOJ’s YCC changes. Many Japanese investors have already
offloaded a large quantity of foreign bonds as their currency hedging costs rose
with the U.S. Fed and other central banks hiking their policy rates. This should
help limit additional appetite for domestic investors to sell foreign bonds to
buy Japanese bonds.
THE AUTHOR
TOMOYA MASANAO
Co-Head of Asia-Pacific Portfolio Management, Co-Head of PIMCO Japan
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