Intriguing RV graphs: Gauging volatility after Lower House election
Key points
- Lower House election resulted in landslide victory for LDP; considering last year's Upper House election and LDP leadership contest, super-long JGB yield volatility may decline near term
- But, difficult for implied volatility to settle back to pre-US reciprocal tariff shock levels; consumption tax cut issue remains resolved
- Growing presence of short-term foreign investors in super-long JGB market also contributing to difficulties reducing volatility due to supply/demand structural factors