2s10s JGB spread drivers and outlook
Key points
Rising expectations of inflation and terminal rate have pushed 10-year JGB yield higher in relative terms in recent years against backdrop of gradual rate hikes
2s10s JGB spread has recently tightened on expectations of accelerated rate hikes, with further tightening possible if rate hikes being priced in materialize
Assessing outlook for 2s10s spread also requires careful monitoring of financial conditions and JGB risk premia