While it is uncertain whether policymakers will be able to hold the 145 line in the sand they have drawn for the yen with their intervention on Thursday, we think the Bank of Japan will be able to defend its 0.25% 10-year yield ceiling, aided by near-record JGB issuance. At the same time, most tourism restrictions will be lifted in mid-October but the net effect on demand in Japan may not be positive as Japanese spending abroad should rise partly at the expense of domestic spending, while Chinese tourists won’t be returning soon.
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