It’s Markets vs. Central Banks, and Traders Are Winning

Japan’s iron chef has been given an impossible task: raising a yield curve that’s flat as an okonomiyaki, or a savory pancake.

The Bank of Japan has made controlling the yield curve a centerpiece of its monetary policy. The idea, initially, was to seek a happy medium that would keep borrowing costs low while nudging part of the curve high enough for banks to make a profit. But in recent months, yield curves have been flattening around the globe, most notably in the U.S., as investors fleeing negative rates pile into longer-dated bonds, pushing yields still lower. That buying has only accelerated recently as central banks, led by the Federal Reserve and European Central Bank, kick of fresh easing cycles.