The Biggest Implications of the Bank of Japan's Decision on US Treasury Market

The Bank of Japan decided to begin the process of catching up to other central banks around the world and take the first step in changing their ultra-accommodative monetary policy stance. We're characterizing the knee jerk selloff on Tuesday as about right for what a earlier than expected departure from yield curve control was worth. The reason that we don't think that there is a great deal more downside in the US Treasury market from the Bank of Japan's decision has to do with the fact that global financial conditions are going to become increasingly less accommodative.