[MARKET ANALYSIS] Fiscal concerns weigh on JGBs and German debt rises amid haven flows
Importance
Level 1
- UST Futures initially gapped higher as risk-off flows dominated the open following the rising trade tensions over Greenland. However, USTs have fallen lower in the presence of light volumes ahead of MLK Day.
- Bund Futures outperforms their US and Japanese counterparts as US markets close for a holiday and JGBs remain underpressure as fiscal concerns arise. This makes the German paper a clear market for investors to seek safety amid the rising US-EU trade tensions.
- JGB Futures slump as fiscal concerns lift yields to record highs. This comes following reports that both the LDP and the newly-formed Centrist Reform Alliance plan to suspend or cut the sales tax, which increases the risk of fiscal expansion.
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