The global surge in long-term interest rates means that 10-year JGB yields are now the highest they have been since the launch of negative rates in 2016. While we expect the Bank of Japan to widen the tolerance band around its 0% target next month, we would expect the Bank to rein in a further rise in yields with a fixed rate auction. Meanwhile, the January activity data are consistent with our view that the second state of emergency won't result in a renewed contraction in GDP in Q1.
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