Fixed Income Commentary

10yr JGB yield upside prospects amid terminal rate overshoot speculation

• 10yr JGB yield sails past key 1.3% level amid speculation of BoJ terminal rate exceeding market expectations

• We calculated future 10yr JGB yield using estimation model that incorporates policy rate expectations, UST yields, economic/price conditions, and stock effect

• If market prices in terminal rate above 1.0%, 10yr JGB yield could top 1.5%