BOJ faces rising bond yields.

The Bank of Japan elected to steer (largely) clear of what many view as a no-win situation Wednesday when Governor Haruhiko Kuroda didn't use this week's policy meeting statement to jawbone government bonds higher (JGBL), although he did pledge flexibility in asset purchases at the post-statement news conference. Surging yields have underscored concerns that the BOJ's purchases could suck liquidity from the bond market, stoking volatility, but rising yields can also be interpreted as a sign investors expect Kuroda will be successful at reflating the Japanese economy. However, acknowledging this is somewhat counterintuitive as "the whole aim of QE is to keep bond yields down," one economist told CNBC, adding that the BOJ is "damned if they do, damned if they don't." Ultimately, the BOJ left monetary policy unchanged, sounded generally optimistic about the prospects for the economy, and noted that some evidence suggests inflation expectations are rising.