LGIM’s Mr Benstead agreed: “Given underlying demand we believe any sell-off to be capped and a buying opportunity.”
The Fed meets this week to decide whether to raise rates, and Mr Iannelli said investors should also take note of the BoJ’s upcoming meeting as the central bank often acted as a test case for unusual monetary policy measures.
The BoJ may yet disappoint. Part of the motivation for the recent sell-off in Japanese debt appears to have stemmed from BoJ governor Haruhiko Kuroda declining to ease policy at the start of the summer, instead committing to a “comprehensive assessment” of monetary policy.
The outcome of the review is due to be presented this week; in the interim, investors have been given conflicting signals as to the bank’s intentions.
“This week’s BoJ meeting will be on many central bankers’ radar,” Mr Iannelli said.
KEY NUMBERS
$1trn: Decrease in amount of negative yielding debt in week to September 15, according to Tradeweb
September 20-21: Date of this month’s Federal Reserve and Bank of Japan policy meetings
