TOKYOSINGAPORE, March 14 Reuters Speculators betting on a historic monetary policy shift in Japan expect money markets will be upended by potential new deposit rules and are crowding into bets against shortdated bonds.

Yields on oneyear Japanese treasury bills , which went sideways through 2023, are up a relatively sharp eight basis points in 2024 to a near almost decade high of 0.067, under pressure from shortsellers. Sixmonth yields , negative for eight years, leapt above zero last week.

The positioning is a bet that the Bank of Japan overhauls a tiered deposit programme that charges financial institutions a discouraging 0.1 rate on excess reserves, and replaces it with a positive overnight rate. Investors assume banks will rush to dump shortdated paper and keep excess cash at the BOJ.

The demandsupply situation on the shortend JGB would dramatically change, said Keita Matsumoto, head of financial institution sales and solutions at Citigroup Global Markets Japan.

Under its yield curve control YCC policy, the BOJ guides shortterm interest rates around 0.1 and has gradually eased its grip on the 10year bond yield with a current soft cap at 1.

While investors have for months speculated the BOJ will tighten policy, this time they expect it will lift overnight rates to zero or just above zero, rather than changing settings for longer term yields.

The BOJ39;s negative rate framework penalises financial firms for parking excess reserves with the central bank. Their…