Citigroup strategist Tomohisa Fujiki says Japan government bond yields may be close to a peak and that JGBs are becoming more attractive as fiscal policy clarity increases and financial institutions boost allocations. He notes Japan’s potential growth is little changed; if inflation stabilizes around 2% a fair 10-year JGB yield would be about 2.5–3.0%. Citigroup expects the yield curve to flatten as markets price in future Bank of Japan rate hikes and JGB supply–demand improves. Strategists incl

Citigroup strategist Tomohisa Fujiki says Japan government bond yields may be close to a peak and that JGBs are becoming more attractive as fiscal policy clarity increases and financial institutions boost allocations. He notes Japan’s potential growth is little changed; if inflation stabilizes around 2% a fair 10-year JGB yield would be about 2.5–3.0%. Citigroup expects the yield curve to flatten as markets price in future Bank of Japan rate hikes and JGB supply–demand improves. Strategists including Ryota Sakagami say this could mark a turning point from the recent value-stock-led rally.