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8 Apr 2013
Forex Flash: Kuroda-shock sees dramatic decline in Japanese yield curve - Nomura
FXstreet.com (Barcelona) - Nomura strategists note that the Kuroda shock last week has seen a dramatic decline in the Japanese yield curve, led by the 20yr point on the curve.
They note that the size of the programme, its impact on nominal (and especially real yields), and the impact through sentiment should see a meaningful asset allocation shifts in coming months. They feel that there will be a direct impact through portfolio rebalancing among the big holders of JGBs (banks, pension funds, and lifers). In addition, there will be a indirect effect through risk appetite changes, which will impact retail investors, even if they hold few JGBs directly. In light of this, they feel that it is not surprising to us that USDJPY reacted to the decisions very favorably. Linked to this, USDJPY may indeed test 100 very soon.
They note that the size of the programme, its impact on nominal (and especially real yields), and the impact through sentiment should see a meaningful asset allocation shifts in coming months. They feel that there will be a direct impact through portfolio rebalancing among the big holders of JGBs (banks, pension funds, and lifers). In addition, there will be a indirect effect through risk appetite changes, which will impact retail investors, even if they hold few JGBs directly. In light of this, they feel that it is not surprising to us that USDJPY reacted to the decisions very favorably. Linked to this, USDJPY may indeed test 100 very soon.