Ex-premier Abe elected as the next LDP chief means bear-steepening pressure on JGBs' yield curve, says Mizuho Securities chief market economist Yasunari Ueno. "It would require a lot of courage for investors to keep buying 30-year JGBs with its yield below 2% if the BOJ is asked to achieve a 2% inflation target and the bank as a result is going to aggressively buy long-term JGBs regardless of criticisms and concerns about it," he says; "in addition, Abe is against hiking the sales tax rate under deflation, which is negative for Japan's attempt to fix its fiscal conditions and we also will be concerned about more issuance in JGBs." Lead December JGB futures are up 0.15 at 144.11, while the 10-year yield is down 1.5 basis point at 0.780%.
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