Volatility in Japan’s longer-dated government bonds is on the rise following Sanae Takaichi’s election win. Yields on Japan’s 40-year debt soared as much as 17 basis points on Monday as traders wagered that Takaichi’s pro-stimulus stance may prompt authorities to sell more government bonds. It added to pressure on long-dated debt around the world, with yields on UK and US 30-year bonds up as much as seven basis points to 5.57% and six basis points to 4.77% respectively.
- The Japanese 10-year JGBs look to trade lower (yields higher) medium term, but into Christmas, we can see the 1.75% is capping the move.
MM is now neutral toward the Japanese 10s short-term
