Intriguing RV graphs: Future of widening Eurozone/Japan yield gaps amid Middle East tensions
Key points
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Widening Eurozone/Japan yield gap (= Eurozone minus Japan), which has expanded since tensions in Middle East escalated, showing signs of peaking; JGB yields rose sharply last week
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Dubai crude oil price surged, following rise for European natural gas prices; Eurozone/Japan energy price sensitivity may not differ significantly
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Positions tied to narrowing Eurozone/Japan yield gap likely to hold up even if Middle East tensions escalate further; room for optimization when selecting maturities