Although the 10-year JGB yield has gradually been creeping up towards the new 1% ceiling tolerated by the BoJ, this is no surprise given a broad-based rise in 10-year sovereign yields elsewhere. Indeed, if it weren’t for the BoJ’s ongoing Yield Curve Control (YCC), the 10-year JGB yield would arguably be quite a bit higher than 1%, let alone its latest level of ~0.67%, given where other yields are now. Nonetheless, our view is that yields in the rest of the world will fall back as the Fed leads the way in loosening policy. So, we continue to doubt the 10-year JGB yield will settle above 1%.
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