For years, U.S. investors could largely ignore Japan and its monetary policy makers. Those days are over. At issue is the possibility that Japanese policy makers are laying the groundwork to abandon a longstanding policy of keeping official interest rates and Japanese government bond yields below or near zero as inflation continues to rise. That, market watchers say, could prompt savings-obsessed Japanese investors to begin selling off foreign assets as domestic investments begin to look more attractive.
“Such is the depth of the savings culture in Japan that when (Japanese) rates are negative and bond yields near zero, the wall of capital out of Japan into Europe and the U.S. has been one of the mainstays of the market,” Huw Roberts, head of analytics at research firm Quant Insight, told MarketWatch in a phone interview. “Depending on how this unwind of policy goes — it’s either going to be a slow burn or a big bang event — the endgame will be the same: less money out of Japan,” he said. “I think it is a really big deal.” The Bank of Japan shook global financial markets in December when it effectively loosened a longstanding cap on 10-year government bond yields, part of a policy known as …