Japan rates weekly review

Barclays notes:

The past few months have seen signs of a long-term change (eg, wage and inflation trends, fund flows) consistent with a sharp rise in yields from H2 16. At this stage, however, there is still a substantial risk that the virtuous cycle in the economy will end prematurely. 

For now, we believe the market will remain focused on the immediate reality of massive BoJ buying and a CPI poised to fall y/y. In Q3, we expect the JGB market to follow overseas bond markets with a low beta, rather than lead them, except for small changes, such as a more convex yield curve (10s cheapening versus 5s and 20s) and higher breakevens.