Mizuho previews the upcoming 30y JGB auction, arguing that yield levels of 3.81% look appealing for outright longs despite Middle East uncertainty and BOJ rate hike signals.
Key Takeaways
- 1.The 30y JGB yield has risen to 3.810%, a level that is expected to attract investors historically sensitive to high absolute yields.
- 2.Strong demand from domestic trust banks is expected due to portfolio rebalancing following the Nikkei 225 moving above 60,000.
- 3.Middle East tensions (Iran conflict) are driving energy prices higher, leading to potential fiscal expansion concerns in Japan, though Mizuho sees limited scope for increased JGB issuance.
Table of Contents
- (1) Positives and negatives ahead of the 30y auction
- POTENTIAL POSITIVES
- POTENTIAL NEGATIVES
- Auction strategy
- OUTRIGHT LONGS
- (2) Key charts
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Authors
Yurie Suzuki
Securities
JX90Nikkei 225
Themes
Fiscal Expansion ConcernsGeopolitical Inflationary PressuresMonetary Policy Normalization
Regions
Asia PacificMiddle EastJapanIran