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How Would the Bank of Japan Destroy Global Markets and Roil Central Banks?
Market Depth
The Cost of Foreign Exchange Hedging for Japanese Investors
JGB yields didn't move during that time. At least the tenure yield, which was pinned at 25 base points cap. So why, why were they selling? It was FX hedging costs that got insanely and prohibitively expensive for Japanese investors. Here's a chart of what the net yield is for a Japanese investor of 10 year US treasuries on a currency hedged basis. And you can see that not only does the nominal yield spread differential get wiped away, but it starts going negative.
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