Japanese bond yields have surged higher in the aftermath of the trade deal announcement, with 10-year yields seen up 8 bps to 1.58% and approaching the highs seen this year. A push above that will take it to the highest since 2008 as yields threaten to soar after having already been pumped higher on political uncertainty in Tokyo.
The latest move though appears to be tied to the trade deal and hopes that it will put the BOJ back on track to resume rate hikes. While political uncertainty is still a factor, I would argue that much of the jump today owes to hopes related to the central bank.
But as for the reality of the situation, I reckon the BOJ might have to wait until what becomes of Ishiba’s fate before really committing to anything.
So while traders are starting to be hopeful again, there’s still some caution to be heeded in all of this for now.
This article was written by Justin Low at investinglive.com.