The Bank of Japan decided to raise its ceiling on ten-year government bond yields from 0.25% to 0.5%. Within minutes of the December 20 announcement, the yen appreciated against the US dollar by 3%, the Nikkei 225 fell by 2.5%, and the ten-year bond rate jumped almost 25 basis points to approach the new ceiling. This sharp reaction owed much to the fact that the decision took investors by surprise ...