JAPAN RATES WEEKLY: Yields Rise as Trump Win Boosts U.S. Rates
(Bloomberg) -- Japan govt bonds drop this week following higher U.S. Treasury yields on speculation that president-elect Trump’s economic policies will spur faster inflation.
- Click here for weekly change in yield curve and here for market snapshot
- U.S. 10-year yield climbs to 10-month high on Thursday, helping to boost Japan’s equivalent rate to most since Sept. 21
- A BOJ board member said more easing depends on price momentum, according to a summary of opinions expressed at a meeting that ended on Nov. 1; summary was released on Nov. 10
- Many BOJ members say new framework will enhance sustainability of easing, according to minutes from the Sept. 20-21 policy meeting released on Monday
- MOF likely to reduce bond issuance next fiscal year, according to Bloomberg survey of primary dealers
- Govt to sell 5- and 20-year securities next week
- BOJ can sit back and be grateful for Trump’s victory: analysts
- WHAT THEY SAY
- MassMutual Life Insurance (Satoshi Shimamura, head of rates and markets at investment strategy department)
- Increase in U.S. Treasury yields seems overdone, probably spurring some correction downward which would support JGB prices
- There’s risk any improper language from Trump, which has been none since he was elected, would lead to lower U.S. yields
- Expects Japan’s 10-year yield to trade between -0.10% and -0.01% next week
- Bank of America Merrill Lynch (Shuichi Ohsaki, chief Japan rates strategist)
- Demand for 20-year notes that offer positive yields and carry roll-down has been increasing
- Seems reasonable to see upward pressure on yields due to speculation of fiscal expansion in the U.S. after Trump wins election with Congress controlled by Republican; surprise vote results spurred unwinding of flattening position in the U.S.
- However, size of fiscal expansion remains unclear and upward trend in yields may stabilize after such position adjustment
- Sees Japan’s 10-year rate in range of -0.07% and 0% next week
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Satoshi Shimamura (Massachusetts Mutual Life Insurance Co)
Shuichi Ohsaki (Merrill Lynch Japan Securities Co Ltd)
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