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Feb 17
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LONG
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Andy Chorlton
Fixed Income CIO, Invesco
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JGBs rallied on a successful auction. The market is resetting expectations regarding Japan's fiscal policy and rate path. The "spending spree" fears regarding the new administration are fading, making JGBs tactically attractive again. LONG JGBs (Tactical). Inflation in Japan re-accelerates, forcing the BoJ to hike faster than priced. |
Bloomberg Markets
Anthropic’s Pentagon Talks Snag, Pound Falls ...
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Feb 17
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SHORT
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Adam
Market Strategist / Guest
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"We've seen some report suggesting that Japanese bond issuance is going to ramp up massively over the next three fiscal years. And the market is kind of still not really kind of engaging with that prospect." While the market is currently buying bonds (yields down), a massive increase in supply (issuance) to fund stimulus will eventually force bond prices down and yields up. The market is currently mispricing this supply shock. SHORT JGBs (or expect higher yields) once the issuance reality hits. The Bank of Japan intervenes heavily to suppress yields. |
Bloomberg Markets
UK Jobs Data Gives Green Light to March BOE C...
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Feb 17
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LONG
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Mark Cranfield
Cross Asset Strategist, Bloomberg
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JGB yields have rallied (yields down) for a week. Political risk from PM Takaichi has faded as she moves to a "middle of the road" approach, and fiscal expansion fears are receding. The market had priced in a "fiscal reckless" risk premium. As the leadership stabilizes and signals fiscal prudence, that risk premium unwinds, strengthening the Yen and lowering yields. LONG JPY as the fiscal stability narrative combines with the safe-haven geopolitical bid. Unexpected hawkish shift from the BOJ or renewed fiscal spending announcements. |
Bloomberg Markets
US-Iran Nuclear Talks in Geneva; Trump Will B...
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Feb 13
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WATCH
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CME Group Presenter
Host/Narrator
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"Japan's 250% debt to GDP ratio creates serious fiscal vulnerability if bond yields spike on aggressive tightening." The sheer size of Japan's debt load means that even small increases in yields significantly increase debt servicing costs, potentially creating a sovereign debt feedback loop. WATCH JGB yields closely; a disorderly spike could trigger broader market volatility. Central bank intervention (Yield Curve Control adjustments) could distort market signals. |
Bloomberg Markets
Which Direction for Japan’s Economy? | Presen...
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