Curve Implications of Progress in Iran Peace Negotiations

Progress in Iran peace talks is driving downward pressure on global long-term yields, but firm BOJ rate hike expectations and new JGB supply concerns from 'bridging bonds' are limiting the decline in Japanese rates.

Key Takeaways

• 1.Progress in Iran peace negotiations is expected to exert downward pressure on long-term rates as global inflation concerns ease.
• 2.Expectations for a BOJ rate hike in June remain high (currently ~80% probability), which will likely prevent a sharp decline in short-term yen rates.
• 3.The Japanese government's proposal for 'bridging bonds' to fund economic growth and crisis management is seen as a negative supply factor for the JGB market.

Table of Contents

• Curve implications of progress in Iran peace negotiations
• Assessing rates impact of "bridging bonds" proposal
• DEVELOPMENTS THIS WEEK AND IMPLICATIONS FOR RATES OUTLOOK
• SHORT-TERM OUTLOOK (ONE WEEK – ONE MONTH)
• MEDIUM-TERM OUTLOOK (SEVERAL MONTHS – ONE YEAR)
• Risk scenarios
• Yen rates relative value and investment strategies
• RELATIVE VALUE SCORE TABLES