Eugene Leow, senior rates strategist at DBS Group Research, said investors will
closely watch the US-Japan short-end rate gap after media reports the Bank of
Japan is open to faster tightening. He noted the one-year USD vs JPY rate spread
has widened since early 2026 as markets shifted from pricing Federal Reserve
cuts to hikes while Japanese rates have moved far more slowly. Leow added:
"Assuming the Federal Reserve's hawkish stance persists, investors would likely
need to see the Bank of Japan willing to speed hikes to 25bp per quarter to
narrow the widening gap."
