Fixed Income Commentary

Intriguing RV graphs: JGB market trying to grasp impact of Lower House dissolution and general election

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Intriguing RV graphs: JGB market trying to grasp impact of Lower House dissolution and general election

Key points
  • Reviewing one-week trends for JGB market after reports of possible Lower House dissolution; increase in fiscal deterioration concerns limited for now

  • But, inflation concerns keep growing; further yen depreciation, BEI (10yr) rise; further widening of 2s10s JGB yield spread

  • Caution required when interpreting initial market reactions; assess pricing-in by market, accounting for reactions to party pledges, election polls

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