24 May 2013
Flash: Yen implications of the JGB sell-off (23 May) - Societe Generale
Societe Generale strategists believe that the recent spike in JGB yields has raised the concern that the market might already be challenging Japan’s new policy.
However, they feel that in sending yields much higher while not buying the yen, the market is actually discounting brighter nominal growth rather than challenging policy credibility. They write, “According to a regression of Japanese inflation expectations and USD/JPY, the currency pair should trade at 108 if and when the break even reaches 2%.”
However, they feel that in sending yields much higher while not buying the yen, the market is actually discounting brighter nominal growth rather than challenging policy credibility. They write, “According to a regression of Japanese inflation expectations and USD/JPY, the currency pair should trade at 108 if and when the break even reaches 2%.”