One final Christmas surprise from the BOJ

The BOJ adjusted its yield curve control program to now allow for 10-year bond yields to target a band in and around 0.50% (doubling the previous band of 0.25%). That's a sudden change in terms of policy as markets did not expect anything whatsoever from the central bank - not at least until Kuroda's term is up next year.

But I guess he just had to get in one last shot before he leaves for good, eh?

The central bank has been very much committed in defending the 0.25% mark in 10-year yields for the majority of this year, which has an indirect impact in anchoring borrowing costs and served as a sort of benchmark for market sentiment.

However, with the latest change, the bond market globally isn't going to enjoy a pretty run up into Christmas and likely even when we get to the turn of the year at this point. We're also already seeing 10-year Treasury yields jump up by over 9 bps today to 3.684% currently.

The Japanese yen is also a major beneficiary and this will likely tee up a potential for a major unwind in yen pairs going into next year, with USD/JPY already dropping by 2.6% to 133.20 at the moment - its lowest in four months.