Citi sees an increasing risk of the 10-year Japanese government bond yield testing 3% sooner than anticipated with a rising fiscal premium, strategist Tomohisa Fujiki says in a note. The JGB curve has steepened due to fiscal concerns and yen weakness, and the key is whether there is repricing of the five-year sector, he says. "Underperformance by the 10-year sector may continue as it has become even harder to take on duration risk," he says. Rate-hike pricing has been brought forward but only modestly, and the two- to five-year sector looks "rich." The 10-year JGB yield last trades at 2.78%, up 1.2 basis points, according to LSEG. (emese.bartha@wsj.com)
Dow Jones Newswires
Japanese 10-Year Government Bond Yield Seen Testing 3% Soon — Market Talk
Citi sees an increasing risk of the 10-year Japanese government bond yield testing 3% sooner than anticipated with a rising fiscal premium, strategist Tomohisa Fujiki says in a note. The JGB curve has steepened due to fiscal concerns and yen weakness, and the key is whether there is repricing of th…