Japan Economic & Financial Weekly - 13 November 2023

Downward pressure on JGB yields from falling US yields exceeds upward pressure from YCC tweaks

  • By Jun Ishii (Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.)
  • Nov 13, 2023
  • JGB yields
Download PDF Printable Version

Downward pressure on JGB yields from falling US yields exceeds upward pressure from YCC tweaks

JGB yield and yield curve scenario for November 13-17
The 10-year JGB yield continues to tread water this week while reacting to developments in the 10-year UST yield. If the latter takes on an upward bias in a reaction to its recent plunge, the 10-year Japanese yield moves higher along with it. However, a combination of BoJ purchases and buying by domestic investors who missed the dip limits the upside for yields. If US economic data point to an economic slowdown and a retreat of inflationary pressures, the 10-year UST yield resumes testing the downside, and the 10-year JGB yield falls in sympathy.  However, lingering concerns about the possibility of a wind-down of NIRP cap the downside for yields. The 20-year JGB yield trades at levels that keep the 10s20s JGB spread at around 70bp.
Forecast range:
10-year JGB yield: 0.830%–0.880%
20-year JGB yield: 1.530%–1.580%

I understand that any materials on this website have been produced only for persons regarded as professional investors (or equivalent) in their home jurisdiction and in jurisdictions which the MUFG entity producing the material is permitted to do so under applicable laws, rules and regulations.

I also understand that all materials on this website are not investment research or investment advice.