Japan Economic & Financial Weekly

10-year JGB yield seen maintaining upward bias in February on fears of March end to NIRP

  • By Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.
  • Jan 29, 2024
  • JGB yields
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10-year JGB yield seen maintaining upward bias in February on fears of March end to NIRP

JGB yield and yield curve scenario for February
The 10-year JGB yield trades with an upward bias in February. Amid widespread concerns about the possibility of an early wind-down of NIRP at the March Policy Board meeting, the 10-year yield exhibits downward rigidity while remaining susceptible to upward movement. Although it follows the 10-year UST yield modestly lower if there is a fresh attempt to price in a March start to Fed rate cuts, it quickly finds support. Meanwhile, it moves higher in sympathy if the 10-year US yield resumes testing the upside on speculation of a delayed start to rate cuts. The20-year JGB yield trades at a level that keeps the 10s20s JGB spread at around 80bp.
Forecast range:
10-year JGB yield: 0.665%–0800%
20-year JGB yield: 1.465%–1.620%

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