Mizuho Securities anticipates support for the upcoming 10y JGB auction at yields near 2.5%, as market participants have largely factored in BOJ normalization and stabilized volatility.
Key Takeaways
- 1.The upcoming 10y JGB auction (JPY 2.6 trillion reopening of JB382) is expected to find support at yield levels near 2.5%.
- 2.Markets have already priced in a high probability (>70%) of a June BOJ rate hike, limiting further yield upside.
- 3.Geopolitical risks stemming from the Iran war and associated energy inflation remain the primary negative factors for demand.
Table of Contents
- (1) Positives and negatives ahead of the 10y auction
- POTENTIAL POSITIVES
- POTENTIAL NEGATIVES
- (2) Auction strategy
- CONSIDER OUTRIGHT LONGS AND/OR ASSET SWAPS
- (3) Key charts
- Important Disclosure Information
- Analyst Certification
- Disclaimer
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Authors
Noriatsu Tanji
Securities
10y JGB JB382JPY OIS
Themes
Monetary Policy NormalizationGeopolitical Inflation Risks
Regions
Asia PacificMiddle EastNorth AmericaJapanUnited StatesIran