Mizuho previews the upcoming JPY2.6 trillion 10y JGB auction, suggesting that 2.5% yield levels should provide support despite geopolitical uncertainty in Iran.
Key Takeaways
- 1.The 10y JGB yield trading near 2.5% represents a psychologically significant threshold that should attract buying interest.
- 2.Markets have already priced in a high probability (over 70%) of a BOJ June rate hike, limiting further yield upside.
- 3.Geopolitical risks, specifically the protracted Iran war and closure of the Strait of Hormuz, remain the primary negative headwind.
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
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Authors
Noriatsu Tanji
Securities
JB3825y Climate Transition Bonds40y JGB
Themes
Geopolitical Conflict and InflationMonetary Policy Normalization
Regions
Asia PacificMiddle EastJapanIranUnited States