Will plunging Cabinet approval rating reignite “Takaichi trade”?
Key points
- Cabinet’s approval rating has nosedived; if approval rating remains low, “Takaichi trade” could resume on JGB market
- In that case, expect twist-steepening pressure on JGB yield curve, widening pressure on ASW spreads due to speculation about interest rate hike delays and fiscal expansion
- However, 10yr JGB yield may not fall much this time if inflation expectations rise due to speculation about delaying rate hikes
