The Bank of Japan’s monetary “bazooka” has all but blown up the country’s government bond market.

The Tokyo Stock Exchange briefly halted dealing in Japanese government bond futures yesterday after sellers pounced on the June 10-year JGB contract, causing prices to plunge and pushing benchmark yields 8 basis higher to 60 basis points, one of the biggest daily jumps in recent years. This followed Monday’s stoppage when a surge in buying also triggered official intervention.

The volatility stems from investor uncertainty over the impact that the BoJ’s mammoth monetary stimulus announced last week, and widely referred to as the “bazooka”, will have on the country’s economy and on demand for its debt. Haruhiko Kuroda, the newly appointed BoJ governor, who has vowed to end Japan’s years of deflation, said yesterday that the bank was resolved to keep printing money for as long as it needed to achieve 2 per cent inflation.