- The yen reduced its gains as investors braced for a Bank of Japan decision in which officials may discuss monetary policy changes.
- Japan's yen was on track for a fifth day of advances as traders considered a Nikkei story that stated the Bank of Japan may reconsider its yield curve control policy at its meeting on Friday. For the first time since March, the country's 10-yr bond yield has risen above the central bank's threshold.
- The Topix and Nikkei 225 equity indexes both fell 1%, leading Asian falls. Hong Kong stocks recovered losses after a report suggested the government was contemplating encouraging investment in the consumer, media, and telecommunications industries.
- China Evergrande New Energy Vehicle fell 68% after resuming trading after a year-long halt. Tokyo banking equities were among a limited group of Japanese stocks that rose in response to the YCC adjustment report.
- While most economists expect the Bank of Japan to remain unchanged on Friday, the Nikkei reported that the central bank may contemplate allowing 10-yr rates to climb beyond its 0.5% cap. The news, which broke during Thursday's New York session, pushed up Treasury yields and caused US equities to fall.
- A Bank of Japan move would have far-reaching consequences for global fund flows. Japanese investors are the largest foreign holders of US government debt, as well as significant holdings of European and Australian bonds, among other assets. Some investors are concerned that higher domestic returns may prompt Japanese institutions to sell their abroad holdings and bring the cash home.
