JG JGBD DB Japanese Govt Bond Futures Inverse Daily ETF Loading... : Bullish and Bearish Analyst Opinions

Ven Ram states the rally in Japanese Government Bonds is "completely unfounded" and "a bit of a reversal" of the recent selloff that is "not going to last too long." Japan imports ~97% of its oil, making it acutely vulnerable to energy-driven inflation. The Bank of Japan was already behind the curve on inflation before the war, and the nominal neutral rate is likely higher than current yields reflect. The fundamental pressure from higher energy prices and existing inflationary dynamics makes the current bond rally unsustainable, implying higher yields (lower prices) ahead. A rapid de-escalation and reopening of the Strait of Hormuz could alleviate energy price pressures faster than expected.