As the yield on Japanese treasury bonds climbed to an “astonishing” level, Morgan Stanley believes that the current 10-year Japanese Treasury yield close to 3% provides a good buying opportunity. Matthew Hornbach, head of global macro strategy at Morgan Stanley, said in an interview: “If the yield on 10-year Japanese Treasury bonds reaches 3%, I would definitely consider buying them. I think it looks very appealing.” He pointed out that if a bond with a nominal yield of 3% is bought, and assuming that Japan's underlying inflation rate is close to 1% in the next 10 years, then the real interest rate will be as high as 2%. In the global bond market, such real yields are quite competitive, especially considering Japan's ongoing challenges of population aging and its negative impact on productivity growth. Recently, long-term Japanese treasury bonds have been drastically sold due to market concerns that the Bank of Japan is slow to act on interest rate hikes and concerns about the sustainability of the Japanese government's debt. Currently, the 10-year Japanese Treasury yield is hovering around 2.80%, the highest level in nearly 30 years that it hit earlier this month. Based on the current macroeconomic environment, Hornbach expects the Japanese treasury bond yield curve to be steeper, and believes that the 5-year to 10-year treasury bond range currently has the most investment value.

As the yield on Japanese treasury bonds climbed to an “astonishing” level, Morgan Stanley believes that the current 10-year Japanese Treasury yield close to 3% provides a good buying opportunity. Matthew Hornbach, head of global macro strategy at Morgan Stanley, said in an interview: “If the yield on 10-year Japanese Treasury bonds reaches 3%, I would definitely consider buying them. I think it looks very appealing.” He pointed out that if a bond with a nominal yield of 3% is bought, and assuming that Japan's underlying inflation rate is close to 1% in the next 10 years, then the real interest rate will be as high as 2%. In the global bond market, such real yields are quite competitive, especially considering Japan's ongoing challenges of population aging and its negative impact on productivity growth. Recently, long-term Japanese treasury bonds have been drastically sold due to market concerns that the Bank of Japan is slow to act on interest rate hikes and concerns about the sustainability of the Japanese government's debt. Currently, the 10-year Japanese Treasury yield is hovering around 2.80%, the highest level in nearly 30 years that it hit earlier this month. Based on the current macroeconomic environment, Hornbach expects the Japanese treasury bond yield curve to be steeper, and believes that the 5-year to 10-year treasury bond range currently has the most investment value.