Japan Funds Waiting for Powell Before Return to Treasuries
- Investors have been heavy sellers of U.S. bonds recently
- With hedging costs high, 3% yield on 10-year notes could help
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U.S. Treasury yields may be a lot higher than can be found in Japan, but Japanese investors beset by a strengthening currency are looking for some additional inducements before ramping up their purchases.
First off, potential buyers want to hear from newly installed Federal Reserve Chairman Jerome Powell, who’s scheduled to testify on the economy at Congress Feb. 28. After stronger-than-anticipated U.S. wage and inflation data in recent weeks, the key questions are what’s his take on the outlook for monetary tightening, and what does he make of the jump of almost a percentage point in the 10-year yield since September.