Japan Economic & Financial Weekly

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BoJ decision on bond purchases focuses more attention on timing of next rate hike

The 10-year JGB yield trades with a downward bias this week but is reluctant to decline further. Investors continue their buybacks on a sense that the worst is over now that the BoJ has revealed its intention to reduce its bond purchases. However, any downside for yields is capped because the 10-year UST yield’s move lower has paused and concerns about an early Japanese rate hike remain. JGB yields reverse higher if these concerns gain fresh momentum. The 30-year JGB yield trades at a level that keeps the 10s30s JGB spread at around 115bp