Japan Economic & Financial Weekly

The 10-year JGB yield trades with an upward bias in February. Amid widespread concerns about the possibility of an early wind-down of NIRP at the March Policy Board meeting, the 10-year yield exhibits downward rigidity while remaining susceptible to upward movement. Although it follows the 10-year UST yield modestly lower if there is a fresh attempt to price in a March start to Fed rate cuts, it quickly finds support. Meanwhile, it moves higher in sympathy if the 10-year US yield resumes testing the upside on speculation of a delayed start to rate cuts. The20-year JGB yield trades at a level that keeps the 10s20s JGB spread at around 80bp.