Mizuho's Japan Short-Term Outlook (one Week - One Month) - FJElite

In Japan, attention is likely to focus on the Takaichi administration’s reflationary economic policy stance, including the risk of expansionary fiscal policy and government efforts to discourage BOJ rate hikes. We see a somewhat elevated risk of further bear steepening of the JGB curve. The area around 3% may serve as resistance for the 10y JGB yield, but the market is unlikely to view that as a firm ceiling.

In the US, a sharp unwinding of rate hike expectations appears unlikely for now, suggesting that rates are likely to remain elevated. On the other hand, there have been few signs that the impact of the Iran war is feeding through to underlying inflation, and the market has already priced in a considerable amount of tightening. We therefore see limited further upside for rates.