Analysis:Investors manoeuvre, warily, for long-shot BOJ policy move

TOKYO : From a rising yen to debt market derivatives, market signals reveal how investors are going for some cheap but fail-safe options to make money on the off chance the Bank of Japan surprises them with a tweak to policy settings this week.

They have instead bought back the yen, and positioned through the bond options market for a spurt in volatility, giving themselves room to gain from a variety of outcomes. Lim thinks the odds of an adjustment to yield curve control , which keeps short-term yields negative and caps 10-year yields at 0.5 per cent, are 60 to 40. He is thus positioned in derivatives, to benefit from market swings in either direction on the day.

Investors think it is time, however, for new BOJ Governor Kazuo Ueda to at least unwind the YCC element of his predecessor's complex policy, given how much YCC has unduly distorted long-term yields, constricted bond markets and crushed bank profits from lending. Jim Leaviss, chief investment officer for public fixed income at M&G Investments, also points to the weak yen, among other factors, as a reason the BOJ would be keen to tweak YCC.

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