📝CTA Positioning Could Send JPY 10Y Swap Back to 1.0%: J.P. Morgan

Overseas speculative players are looking persistently bearish on JGBs. Selloffs in overseas bonds are a tailwind here, with trend-following funds (CTAs, technical-oriented) steadily accumulating positions in futures and swap markets premised on rising yields. Overseas macro hedge funds (= fundamentals-oriented) are likewise testing a gradual expansion of JGB shorts. Assuming CTAs restore shorts to the previous maximum (seen in January 2023), we think this could have the JGB 10Y swap on course for 1.00%. - J.P. Morgan Derivatives Strategy