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27 Jun 2013
Flash: JGB market remains indifferent – UBS
FXstreet.com (New York) - According to Gareth Berry, a Research Analyst at UBS, “The JGB market remains indifferent, though this is highly unusual given core yields tend to track each other quite closely.”
The JGB curve’s refusal to react this time is all the more remarkable given its supposed fragility after the BoJ’s new policy agenda was unveiled on April 4th. Clearly we saw extreme JGB volatility in April and into May, but the market appears to have regained its footing of late, and the recent price action is testament to this.
In particular, “JGB participants have finally digested the scale and likely consequences of Governor Kuroda’s new easing program, and the market appears to have found a new equilibrium. Technical adjustments to how the program is implemented helped too as the BoJ switched to holding smaller (but more frequent) JGB buyback operations.” Berry adds.
The JGB curve’s refusal to react this time is all the more remarkable given its supposed fragility after the BoJ’s new policy agenda was unveiled on April 4th. Clearly we saw extreme JGB volatility in April and into May, but the market appears to have regained its footing of late, and the recent price action is testament to this.
In particular, “JGB participants have finally digested the scale and likely consequences of Governor Kuroda’s new easing program, and the market appears to have found a new equilibrium. Technical adjustments to how the program is implemented helped too as the BoJ switched to holding smaller (but more frequent) JGB buyback operations.” Berry adds.