Today’s rise in the 2-year Japanese government bond yield to its new highest level since 2011 raises the question of whether this is the start of a far bigger sell-off in the bond market, or just another false dawn that will reinforce the reputation of betting against JGBs as a ‘widowmaker’ trade given its lack of success during most of the past three decades. Our expectation is that such a fate won’t befall those who shun the JGB market this time around, but that the rewards for doing so will be small.
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