JPY flows: More new highs in JGB yields suggesting USD/JPY downside

10 year JGB yields continue to move to new 15 year highs, further narrowing the spread with the US and suggesting scope for significant USD/JPY declines. The rise in JGB yields to some extent reflects stronger Japanese data, but may also be a policy decision from then BoJ not to restrict yield gains. S it stands, the spread suggests scope for USD/JPY to fell well below 150, with bigger losses longer term, but as usual, the declines are more likely to come in more risk averse markets.