Analysis: Japanese Government Bond Yield Curve May Steepen in Q4

Deep News14:45

Two strategists from Morgan Stanley MUFG Securities stated in a research report that the Japanese Government Bond (JGB) yield curve is highly likely to experience a "bear steepening" in the fourth quarter. The strategists pointed out, "Given the robust resilience of US economic growth and expectations that the Bank of Japan (BOJ) will accelerate the pace of interest rate hikes in 2026, we believe the market is gradually raising its expectations for short-term rates, which is the driving force behind the 'bear steepening' of the yield curve." The report stated, "Our team of US economists has already raised its economic growth forecasts due to clear signs of strong private consumption; meanwhile, our Japan team expects the Bank of Japan's (BOJ) next rate hike to be announced at the June 2026 meeting." The brokerage firm forecasts that the yield on Japan's 10-year government bond will remain at 2.30% in the first and second quarters, rise to 2.45% in the third quarter, and then fall back to 2.40% in the fourth quarter. As of now, the yield on Japan's 10-year government bond is reported at 2.270%, up 2.5 basis points from the previous level.

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