Questions about the JGB curve: Localized instances of downward sloping yields
Key points
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Localized instances of downward sloping yields seen at long end of JGB curve, particularly within off-the-run 40-year segment
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We attribute this anomaly at least partly to scarcity and investor preference for specific issues
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Supply/demand dynamics in 40-year sector suggest yield anomaly will persist, and even if it resolves, a positively sloped yield profile is likely to be some way off