Although the 10-year JGB yield has dropped back by about 10bp since the Bank of Japan refrained this week from abandoning Yield Curve Control, we think the yield will rebound when – or quite possibly before – a new Governor ditches the policy in April. After all, there is still a significant “kink” in the curve that suggests the 10-year JGB yield would be closer to 0.75% than 0.5% if it weren’t being held down by the Japanese central bank’s bond purchases.
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