The issue
The Bank of Japan’s yield-curve control policy is under a renewed challenge that may mean 2023’s yen bond losses have further to run. Leveraged investors returned to a popular trade, going short on underlying cash JGBs and long futures as 10-year yields are lower than future expectations. The BOJ may end its negative rate policy this quarter and the benchmark yield could trade around 0.75% in a year, swaps and forwards signal.
Tracking
To compare Japanese sovereign debt with global peers, run WB <GO>. Japan is the only developed country in the world with its current 10-year sovereign yield (blue dot) trading higher than average (orange diamond) this year.
Bloomberg
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