[MARKET ANALYSIS] JGBs on the backfoot with yields markedly higher and the curve steeper, global fixed income in-fitting

• Fixed on the backfoot as yields climb in catch-up to Monday's US holiday and with Japan at record levels.
• JGBs down to a 130.66 base, c. 80 ticks below the close on Monday. Pressure driven by the Takaichi trade being in force into the formal election announcement on Friday, and then the polls on 8th February. Pressure that appears to be driven by scrutiny of the fiscal plans of both the government and the combined opposition, as they outline plans to postpone/remove various tax measures.
• Action that has driven Japanese yields to highs. The 40yr above 4.23% (+40bps), the 30yr above 3.90% (+41bps), 20y to 3.48% (+32bps), 10yr to 2.38% (+20bps). Evidently, the curve is markedly steeper. Japanese newsflow and price action have unsurprisingly led to speculation around JPY intervention, but slightly more unusually, desks have spoken on JGB intervention. Specifically, Macquarie's Berry wrote, "if the selloff continues, and especially if it spreads globally, then we should see the BoJ dust it [bond buying tool] off and put it to work - maybe as early as tomorrow morning's daily operations". 
• Evidently, we have seen the selloff spread globally.

JGBs are under pressure as yields rise sharply ahead of the upcoming election and scrutiny of fiscal plans, reflecting a response to global market dynamics. The selloff across fixed income could prompt the Bank of Japan to consider intervention, particularly if this trend continues. This environment may influence the broader yield curve and set expectations for potential central bank actions moving forward.