on tuesday japans economy reported an expansion of 06 in the final quarter of 2022 on an annualized basis while it technically averted a recession the rebound was smaller than expected we think a policy change could come at any moment – scrapping the ycc cap risks pushing global yields higher and reducing risk appetite the note said in december global yields jumped after the bank of japan widened its yield curve tolerance range from 25 basis points above and below 0 to 50 basis points us treasury yields spiked with the 10year note and the 30year note jumping 7 and 8 basis points respectively european government bonds also sold off including germanys 10year bund japans core consumer price index hit its highest level in 41 years in december the nation is scheduled to release its inflation print for january on feb 24 we think that paves the way for the boj to roll back policies that by its own measures may have achieved their goal to foster a sustained rise in inflation toward its 2 target that is underpinned by wage growth blackrock strategists said in the note regardless of who takes over we think the wage and inflation dynamics at play mean the current policy stance has likely run its course they wrote one possibility is the bank of japan further widening its tolerance range beyond 50 basis points blackrock noted the yield on the 10year japanese government bond has surpassed its limit it last remained unchanged at 05 – the upper ceiling of the band another possibility is for the bank of japan to abandon yield curve control altogether that would push yields higher and stoke interest rate volatility blackrock said adding that removing the program would put the central bank on track to stop bond purchases the firm noted the boj owns over half of outstanding jgbs nikkei separately reported earlier this month that the central bank purchased 237 trillion yen 182 billion of jgbs in january a new record high