Tommy Wilkes offers a glimpse at what the markets will look like in the future.

The Bank of Japan, despite being the most dovish central bank in the world appears to be comfortable with higher interest rates. This is a clear sign that policymakers have accepted the fact that the dramatic selloff of the bond markets this month will not reverse.

Given Japan’s slow wage growth and long-term inflation expectations, the BoJ is always considered the bank that will stop yield rises. However, the BoJ resisted the temptation to enter the market Friday, even though the 10-year yield on government bonds rose to a 6-year high.

It is now offering to pay more than it did in February when it was willing to take on unlimited amounts of debt.

Graphic: Japan govt bond yield: https://fingfx.thomsonreuters.com/gfx/mkt/lbvgnmoerpq/japan%20yields.PNG

Japanese borrowing costs have been pushed higher by rising yields around the world, which are increasing along with expectation for an aggressive pace in rate increases by the U.S. Federal Reserve or other central banks.

Even though 10-year Japanese yields only average 0.24% at the moment, this is twice what they were in early-March. Bond moves and failure of the BOJ to intervene helped the yen rebound from six-year lows against the dollar. It rose as high as 1% at one point.

After soaring in March, yields in the U.S.A and the euro zone have slowed down in recent days but are still at multi-year records — the 2-year U.S. Treasury yield has risen 72 basis points since 2004, its largest monthly increase since 2004.

Other markets are set to have a mixed day after week-end when investors looked beyond Ukraine’s war and bid up share price, which is back higher than before it started.

This is despite the fact that U.S. yield curves are indicating recession and there’s been a lot of economic data. However, British February retail sales were lower than anticipated.

Other important economic data is not due Friday, and much focus was placed on NATO Summit in Brussels. This summit aimed at showing a united Western Front against Russia’s month-long invasion.

Markets should be more informed by Friday’s key developments

German IFO

John Williams (New York), Thomas Barkin (Richmond), Governor Christopher Waller

Ida Wolden Bache, Governor of the Norway Central Bank speaks

Inflation expectations for the University of Michigan