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Photo Illustration: Eniola Odetunde/Axios. Photos: Bloomberg, Samuel Corum (Stringer)/Getty Images

While Fed chair Jerome Powell is brushing off the seismic rise in government bond yields and a corresponding decline in stock prices, a group of central bankers in the Pacific are starting to take action.

Driving the news: Bank of Japan governor Haruhiko Kuroda told parliament on Friday the BOJ would not allow yields on government debt to continue rising further above the BOJ's 0% target.

  • “It’s important now to keep the entire yield curve stably low as the economy suffers the damage from COVID-19,” Kuroda said, adding that the central bank plans to adjust its yield curve control program.

What it means: Kuroda is intimating that the BOJ is ready to step in and buy more bonds to push up prices and bring down yields after 10-year government debt rates rose to the highest since January 2016.

Why it matters: In addition to the repricing in equities, especially tech stocks, rising inflation expectations mean rising prices for consumers in the form of costlier loans, higher gas prices and increasing costs for goods.

  • The rise in bond yields means a fall in bond prices, which is a capital loss for investors, and bonds have been far more popular than stocks over the last few years.

Be smart: Kuroda, who heads the central bank where inflation has been the tamest for the longest, is the most important leader to begin the process of intervening to bring down bond yields but is hardly the first.

  • The Reserve Bank of Australia (RBA) bought $4 billion of government bonds Thursday in order to stem falling prices, matching the record high from March 2020 when it began its quantitative easing (QE) program.
  • The Bank of Korea (BOK) promised as much as $6.3 billion in new bond-buying before the end of June.

Between the lines: The central bank heads taking action — Kuroda, RBA's Philip Lowe and BOK's Lee Ju-yeol — are all classically trained macroeconomists who have been at their respective central banks for decades.

  • Powell, who is downplaying rising bond yields and encouraging inflation, is a trained lawyer with less than a decade of central bank experience.

What's next: The European Central Bank will publish its latest bond-buying figures at 9:45am ET and investors will get to see whether the bank significantly raised its purchases, signaling top policymakers are backing recent assurances that they won’t tolerate higher yields with action.

  • Investors also will hear from Powell and a wide swath of Fed policymakers this week.
Charted: Rates rise around the world
Data: Investing.com; Chart: Andrew Witherspoon/Axios

Go deeper

More than a dozen injured in downtown Austin shooting

Police tape in Austin, Texas in 2018. Photo: y Carolyn Van Houten/The Washington Post via Getty Images

A shooting in a busy part of downtown Austin, Texas, early Saturday injured at least 13 people, including two who are in critical condition.

The state of play: Gunfire erupted around 1:30 a.m. along 6th Street, a popular area with bars and restaurants. The suspected shooter remains at large, Austin police said. "It is unknown if there is one, or multiple suspects involved," they noted, adding the shooting appears to be an isolated incident.

Biden to urge G7 to take unified approach to countering China

Photo: Hollie Adams/Bloomberg via Getty Images

President Biden on Saturday is expected to urge fellow G7 leaders to adopt a unified approach to countering China's rising global influence, AP reports.

Driving the news: The G7 leaders are set to unveil a multi-billion-dollar global infrastructure plan aimed at rivaling Beijing's efforts in the developing world.

Why America's post-vaccine summer is off to a slow start

Illustration: Sarah Grillo/Axios

Americans are itching to put pandemic life behind them, but many of the necessary ingredients for a summer of carefree fun — everything from neighborhood pools to car rentals — still aren't fully available.

The big picture: Labor shortages, scrambled supply chains and simple logistics are all making it harder for a whole range of businesses to meet post-pandemic demand, and that’s making “hot vax summer” a little harder to pull off.

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