Intriguing RV graphs: Impact of prolonged Middle East conflict on JGBs, ASW
Key points
Government bond yields now rising sharply worldwide; steepening of Japan’s yield curve stands out among major economies
ASW spread narrowing despite news suggesting fiscal expansion; sharp rise for inflation expectations is also difficult to explain
Wary of declining liquidity; risk of amplifying JGB yield rise not in line with fundamentals; close monitoring of bid-ask spread is warranted