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20 Aug 2013
Flash: USD/JPY favored by unlikely source – UBS
FXstreet.com (New York) - US 10y Treasury yields have risen 9.5bp since Friday's open, setting a new two year high as the countdown to the September FOMC meeting continues, notes Research Analyst Gareth Berry at UBS.
Key quotes
“A sell-off in the US Treasury market usually affects core bond markets elsewhere, but JGBs seem to have forgotten this tradition. For example, the 10y JGB yield has only climbed 1.5 bp since Friday's open, and so the US-Japan bond spread continues to widen in favor of USD/JPY upside.”
“We look for more spread widening over the months ahead, as the Fed begins the process of QE3 tapering while the Bank of Japan continues to lean heavily on the JGB curve.”
Key quotes
“A sell-off in the US Treasury market usually affects core bond markets elsewhere, but JGBs seem to have forgotten this tradition. For example, the 10y JGB yield has only climbed 1.5 bp since Friday's open, and so the US-Japan bond spread continues to widen in favor of USD/JPY upside.”
“We look for more spread widening over the months ahead, as the Fed begins the process of QE3 tapering while the Bank of Japan continues to lean heavily on the JGB curve.”