Treasury yield curve steepens as BOJ introduces yield curve control

Treasury yield curve steepened after the Bank of Japan (BOJ) kept rates unchanged and said it would keep 10-yr yield around zero percent.

At the time of writing, the benchmark 10-yr treasury yield was up 3.3 basis points at 1.72%. The 30-yr yield was up 5 basis points at 2.478%. Meanwhile, at the short-end of the curve, the two-year yield was marginally higher at 0.787%.

Bank of Japan (BOJ) changed its focus to yield curve control. It means the bank would do whatever necessary to keep 10-yr yield around zero percent. This indirectly suggests the central bank does not want the curve to flatten given it has kept the QQE program largely unchanged.