Daiwa Securities: If WTI crude oil drops to $80, 10-year Japanese government bond yield may fall to 2.60%
- Daiwa Securities strategist Shun Otani stated that if West Texas Intermediate crude oil futures fall to $80, it will push the 10-year Japanese government bond yield down to around 2.60%.
- He said: "A ceasefire agreement that includes reopening the Strait of Hormuz would alleviate inflation concerns and be favorable for the Japanese government bond market. The yield is expected to drop by about 10 to 20 basis points from its current level."
- He added: "On the other hand, concerns over fiscal sustainability and monetary policy lagging behind the situation in Japan remain serious. This means that the transition to a stage of broadly declining yields will largely depend on the government's stance."
- The 10-year Japanese government bond yield recently fell by 7.0 basis points, to 2.69%.
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