January 25, 2023 05:05 GMT
BofA Like 5-/10-Year Swap Steepener
JGBS
Bank of America write “even if it lets the long-end sector trade freely in the future, we think the BoJ would still want to keep the yields low at the short and intermediate sector of the curve. The intermediate sector is important as it reflects the market's expectations for a monetary policy cycle. The BoJ conducted a 5-Year funds-supplying operation on January 23, which appears to reflect its interest in this sector. There may even be a scenario where the BoJ leaves the basic framework of YCC, but moves the target sector from 10-Year to 5-Year.”
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