Japan policy shift priced by June
Yen bounces on speculation of March move
Shortend JGBs under pressure; stocks hit air pocket

SINGAPORE, March 13 Reuters Barely weeks after Japanese stocks broke threedecade highs, the country39;s financial markets are hurtling toward another phenomenon not seen for the best part of a generation rising interest rates.

Bankers are attending remedial classes on what to do when rates move and trading rooms are setting up for moribund derivative markets to spring to life as they have begun to do.

Their pricing implies a matter of months at the most before the last bastion of a decadeslong monetary policy experiment with negative shortterm rates falls. An exit by the Bank of Japan is expected by June, with an even chance that rates will rise to zero next week.

Such a move, up 10 basis points, would be small, leaving traders to focus on broader signals whether any change is implemented immediately, or later, and whether the BOJ winds down its enormous buying programme for assets ranging from Japanese government bonds to listed equity funds.

The symbolism is also heavy as Japan seeks to leave behind lost years marked by deflation and reawaken the fourthbiggest economy in the world as a destination for investment a change already rippling through corporate Japan and global markets.

I personally think this is going to be the beginning of a new era, said Keita Matsumoto, head of financial institutions sales and solutions at Citigroup…