📝 Raising 20-Year JGB Forecast to 1.5%: MUFG Strategy

We would need to lift the top end of our forecast range for the 20-year yield to 1.50% (= 1.32% + 0.18%), requiring an increase of as much as 20bp. But a 20bp increase seems somewhat excessive when we also consider the current sense of prices and levels (vs. other maturities, for which our forecast ranges have not changed). A more realistic adjustment would probably be half a standard deviation (0.5σ), or around +9bp. That would raise the top end of our forecast range to 1.40% (≒ 1.32% + 0.09%), representing an increase of 10bp. Incidentally, the recent closing high for the 20-year JGB yield was 1.400%, recorded on January 12 this year.

We have also lifted the top end of our forecast ranges starting in 2024 and our point forecasts from end-September 2023 onwards by 10bp. - MUFG