The UK CPI reading increased by 10% which has widened the yield spread between US and Japanese government bonds. As we know, rising interest rates cause bond prices to fall and bond yields to rise.
Critics commented that BoE Governor Andrew Bailey was too slow to respond to the emerging inflation threat last year by taking time to raise inflation rates, which means that now the Monetary Policy Committee at the Bank of England will have to over correct and increase rates higher. A main concern is that in the UK, the persistency of price and wage increasing means that they are feeding on each other and that inflation is never ending.
The new Bank of Japan Governor Kazuo Ueda stated that he would follow the BOJ’s current policy stance. The BOJ let the yen keep its policies loose as the yen is much higher than it was last year.
Looking at this from a technical standpoint, rates recently broke above 166.00 and is headed to 166.85 to 167.00. Movement must be slow and steady to further the current trend. It will be interesting to see how this will pan out and that increased leverage increases risk.