Forex Flash: Tracking JGB performance in light of BoJ – Deutsche Bank

FXstreet.com (Barcelona) - According to Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank, “Outside of a general global bond sell-off, it seems that inflation expectations have contributed to the move in JGBs and allowed it to under-perform other markets.” The Japanese 5yr breakeven rate (currently 1.86%) is now more than 50bp higher since the BoJ's announcements in April and +130bp since the mid-2012 lows.

The moves have also added steepening pressure on curves with the 2yr-30yr Japanese curve steepening by 50bp since April 4th. The selloff was also evident in other bond markets including USTs where 10yr yields added 5.5bp yesterday to move back into the low end of the 1.95% to 2.05% trading range that held for much of Q1. In Europe, UK, French and German yields were a touch wider.