A trading room about an hour’s train ride from Tokyo is on the radar of Japanese government bond investors waiting to see whether domestic banks will resume buying the nation’s debt in earnest.
Joyo Bank, one of Japan’s largest regional lenders, is holding off from investing in domestic bonds for now, though, according to Yoshitsugu Toba, a managing executive officer at the bank. While his main scenario is for the Bank of Japan to lift interest rates just one more time in July, he also sees the risk that debt yields will climb even further if the BOJ raises rates to around 1.5%, at most, in about three years.
There’s keen interest in the market on whether Japan’s regional banks will pour back into benchmark 10-year notes, whose yields jumped to the highest levels since 2009 in Tokyo trading on Friday.
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