Japan remains a potential source of global market volatility as yen weakness persists alongside rising long-end JGB yields, OCBC strategists say. Perceptions that the BOJ is behind the curve is fueling depreciation pressure on the yen, and OCBC reckons investors may see future rate hikes as driven more by the Takaichi administration's policy direction than economic data alone. Further yen depreciation would likely weigh on regional currencies, particularly the won and the baht, but OCBC thinks the larger spillover risk lies in higher long-end JGB yields. That may already be spurring upward pressure on Treasury, gilt and bund yields, and if JGB yields keep climbing, global yields could be pushed higher still, they say. (fabiana.negrinochoa@wsj.com)
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Yen Weakness, Rising JGB Yields Could Spur Global Volatility — Market Talk
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Japan remains a potential source of global market volatility as yen weakness persists alongside rising long-end JGB yields, OCBC strategists say. Perceptions that the BOJ is behind the curve is fueling depreciation pressure on the yen, and OCBC reckons investors may see future rate hikes as driven…