Intriguing RV graphs: Recent sharp JGB yield rise driven by not only fiscal concerns
Key points
- JGB yields surge amid speculation about large-scale economic stimulus, but ASW spread remains stable; reduced liquidity impacts also seem limited
- OIS rates suggest pricing in of monetary policy based on “high-pressure economy” that is characterized by higher inflation and growth while BoJ slowly raises rates
- Going forward, we focus not only on fiscal policy, but also on monetary policy; interest rate hikes could actually contribute to stabilizing super-long JGB market