Fixed Income Commentary

Intriguing RV graphs: "New LDP president Takaichi trade" set to begin

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Intriguing RV graphs: "New LDP president Takaichi trade" set to begin

Key points
  • Sanae Takaichi wins surprise victory in LDP leadership election; we basically expect JGB yield curve shift toward twist steepening
  • But, this time, as long as expectations for BoJ rate hikes over the medium term continue to linger, medium/long-term JGB yields may prove resilient
  • Caution needed for super-long JGB yield initial reaction; while Takaichi has toned down her fiscal expansion stance, super-long JGB liquidity has declined

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