JGBs Likely To Ease As Japan Election Looms

JGBs are likely to fall as the prospects of Japan's conservative Liberal Democratic Party winning a planned general election on Dec. 16 fuel speculation for more aggressive policy to inflate the economy. LDP chief Shinzo Abe, who could become prime minister should his party topple the increasingly unpopular ruling Democratic Party of Japan as expected, is a champion of "bold reflationary policy," writes SMBC Nikko Securities strategists; "The initial market reaction (to any LDP victory) would be to push stocks higher, sends the yen lower, and cause a yield-curve steepening in the bond market." They note the benchmark 10-year yield could rise to 0.755% vs 0.750% at Wednesday's close, and tip lead December futures in a 144.25-144.45 band vs 144.47.

JGBs Likely To Ease As Japan Election Looms

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