The Bank of Japan has fueled a global curve steepening and the US Treasury is forced to emphasize the trend with substantial ramifications for liquidity, rates, FX and equities. Here is how we play it!
The market struggles with duration issuance as the positioning is already loaded with bonds, while the BoJ keeps weakening the JPY (on purpose) as they continue to crowd out investments.
It is a BIG week in Japanese central bank history with widespread speculation of another increase to the trading range of 10yr JGBs in the yield curve control program. More than 35 bps are priced in, but will BoJ fail to deliver?