JGB Market Compass

Excess liquidity-driven market to continue even after ending NIRP, YCC

• Despite historic stock market rally, traditional inverse correlation (bond weakness) remains dormant

• Excess liquidity due to QQE seen as one factor; 10yr JGB yield unable to top 1% level allowed by YCC revision

• Even after ending NIRP and YCC, Bank will continue purchasing enough long-term JGBs to avoid JGB market plunge and excess liquidity-driven market will likely persist