Japan Yields Open Reverse Carry Trade
Rising Japanese bond yields are creating a reverse carry trade opportunity for overseas investors as Bank of Japan rate hikes make traditional yen-funded trades less appealing. Eastspring notes ultra-long government bonds offer higher hedged yields compared to base currency equivalents.
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Rising bond yields in Japan are creating a reverse carry opportunity for overseas investors. Bank of Japan rate hikes make the traditional yen-funded trade less compelling, according to Eastspring Investments.
The shift follows parallel rate increases by the United States Federal Reserve and the BOJ. Japanese asset prices have swung sharply as decades of ultra-cheap yen funding give way to domestic bonds offering higher relative returns.
