Japan Economic & Financial Weekly

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Investors take wait-and-see stance ahead of July 31 Policy Board meeting

The 10-year JGB yield treads water this week. Investors worried about the uncertain size of the reductions in the BoJ’s bond purchases and possible changes to the conduct of its buying operations take a wait-and-see stance ahead of the July 30-31 Policy Board meeting. The 10-year JGB yield may be influenced in the short term by fluctuations in USD/JPY and the 10-year UST yield fueled by speculation regarding the US presidential race, but a clear trend is unlikely to form, and trading is rangebound. A fresh test of 1.0% on the downside prompts players to sell into strength on worries the market has overshot, while a move toward the recent high of 1.1% elicits dip-buying. Blackout periods begin for the BoJ on July26 and for the Fed on July 20.