Halister News

(Bloomberg) -- Government bond yields have broken above their recent ranges and may be on the cusp of a larger correction as they “may have become irrationally low this year, and driven to extremes in the wake of Brexit,” writes Greg Gibbs, director of Amplifying Global FX Capital, in note to clients.

• Subtle policy shifts by BOJ and ECB point to their reluctance to deliver more QE, as well as dissatisfaction with low and negative longer-term bond yields
  • Fed is also creeping closer to another rate hike: Gibbs
• Rise in Japanese long-term yields since July 29 and more recently after speeches by BOJ’s Kuroda and Nakaso may have been the most important catalyst of higher global bond yields
• BOJ appears to be aiming for higher longer-term yields, balanced by lower short-term yields
• BOJ would accept a bigger rise in bond yields (curve steepening without the twist) if it coincided with a weaker JPY, as it would help lift inflation expectations
• JGB 10-year yield rises to -0.015% from -0.020% on Sept. 12