TOKYO, Nov 1 Reuters The Bank of Japan intervened in the government bond market on Wednesday to rein in a jump in yields to fresh decade highs, underlining the challenge for the central bank a day after loosening its grip on longterm interest rates.

The 10year Japanese government bond yield rose 2 basis points bps to 0.970, a level last seen in May 2013, before retreating to 0.960 immediately after the BOJ announced an emergency bondpurchase operation.

Japan39;s central bank on Tuesday took another small step away from its decadelong commitment to ultraeasy stimulus by changing the 1 ceiling for the 10year yield to a reference point rather than a hard cap.

The monetary authority also removed a pledge to defend the level with offers to buy unlimited amount of bonds, nodding to market forces that have continued to push yields up in line with global moves and domestic inflationary pressures.

Tuesday39;s adjustments has made it more likely for there to be a continued sense of caution in the market that we39;re moving in the direction of policy normalisation, said Keisuke Tsuruta, fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities.

Tsuruta sees the tweak as a step toward the BOJ eventually exiting from negative interest rates policy, which he expects around the beginning of next year at the earliest.

The twoyear JGB yield had ticked up to 0.160, while the fiveyear yield reached 0.480, levels not seen since 2011.

On the superlong end, the 20year JGB…