Intermediate JGBs Expected to Outperform Short- and Long-End Peers
Dow Jones
Oct 09
1117 GMT - Morgan Stanley maintains its exposure to the intermediate segment of the Japanese government bond curve, expecting both shorter- and longer-tenor bonds to underperform. "Faster Bank of Japan hike pricing could compress term premia through financial-conditions concerns, while super-long resilience appears vulnerable to a reversal in GPIF [Government Pension Investment Fund] repatriation expectations," strategists Koichi Sugisaki and Hiromu Uezato say in a note. Super-long JGB yields could face renewed upward pressure as pension rebalancing following yen strength likely shifts allocations from domestic to foreign assets. Meanwhile, yen weakness could sustain hawkish front-end pricing as markets focus more on political developments rather than economic fundamentals, they add.
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