CITIGROUP strategist Tomohisa Fujiki said that if Japanese inflation stabilizes around 2%, a 10-year JGB yield near 3% would be reasonable. Given anticipated rate hikes and oil-price dynamics, yields could rise further, he added. He warned that if the policy rate does not break above 2%, a 3% 10-year yield should be attractive to real-money investors. Fujiki said markets are temporarily pricing roughly one rate hike per quarter but Japan’s terminal rate may cap at about 2% or below. The 10-year

CITIGROUP strategist Tomohisa Fujiki said that if Japanese inflation stabilizes around 2%, a 10-year JGB yield near 3% would be reasonable. Given anticipated rate hikes and oil-price dynamics, yields could rise further, he added. He warned that if the policy rate does not break above 2%, a 3% 10-year yield should be attractive to real-money investors. Fujiki said markets are temporarily pricing roughly one rate hike per quarter but Japan’s terminal rate may cap at about 2% or below. The 10-year JGB yield last fell 1.5 bps to 2.975%.