At the end of April, Bank of Japan (BoJ) Governor Ueda kept yield curve control unchanged and announced a comprehensive review of the BoJ's monetary policy, to be completed in the second half of 2024.
These announcements were taken as a dovish tilt by the market, causing the Japanese Yen to depreciate and Japanese Government Bonds (JGBs) to rally.
However, Wellington Management's Marco Giordano believes that investors should take a more nuanced approach to interpreting what might come next.
"For example," he says, "Tokyo Core CPI has been at levels not seen since early 1980s, and nominal retail sales are growing faster than in the US."
He adds that Japanese government bonds have long been the anchor for the global rates complex. "If and when the BoJ shifts policy, this will likely have reverberations all over the world."
This post is funded by Wellington Management
