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Rethinking our spring scenario for 10-year JGB yield after March 19 BoJ decision
The 10-year JGB yield is rangebound in the area around 0.75% this week, the last week in FY23, as it seeks a sense of direction. It takes on a downward bias if there is significant buying to restore portfolios depleted by the large bond redemptions on March 21, in which case generally satisfactory results for JGB auctions reassure buyers and fuel expectations of buying at the start of FY24. But if Policy Board member Naoki Tamura emphasizes the possibility of higher inflation in his public appearance on March 27, concerns about early additional rate hikes prompt the10-year JGB yield to take on an upward bias. The 30-year JGB yield trades at a level that keeps the 10s30s JGB spread at around 107bp.
