Goldman Sachs pointed out in a new report, the Bank of Japan's July interest rate meeting "surprise attack on the market", became a catalyst for the upward movement of U.S. bond yields, but also to make the global macroeconomic situation more complex: the market consensus on the duration of the interest rate is facing a challenge, because we are entering the summer liquidity conditions of the most severe period.
The Bank of Japan since last Friday's meeting to adjust the YCC yield curve policy signals, or ultimately the end of ultra-loose monetary policy, which will make Japanese bonds more attractive to U.S. bonds, the big "gold masters" - weakening demand from Japanese investors, or U.S. bond prices to extend the downtrend.
Market speculation on the normalization of monetary policy may exacerbate the risk of funds from the U.S. and European economies back to Japan, making U.S. bond prices under further pressure.
In UBS's 10-year Japanese bond yield model, U.S. bond yields and Japan's CPI are key explanatory variables:
If U.S. bond yields rise from here, then Japanese yields will continue to rise as well.
Peter Tchir, an analyst at investment bank Academy Securities, said that given the higher yields on Japanese Treasuries, this may mean that fewer and fewer Japanese investors will be buying U.S. Treasuries: Japanese investors are big buyers of non-yen-denominated bonds, and so as foreign exchange hedges are reduced, Japanese holders will be selling U.S. dollar-denominated bonds.
