Despite all of the debt and deficit news out of the US, the spotlight in ultra-long bond markets has increasingly been focused on Japan. The surge in yields there last week seems to have sparked a global sell-off, and the subsequent plan from Japan’s Ministry of Finance to curtail ultra-long issuance in turn saw a global rally. And today, a somewhat-soft 40-year JGB auction seems to have contributed to a slight souring of the global mood. We think there are two questions to consider.
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