According to BlackRock, for dollar investors willing to invest in long-term debt, Japanese sovereign bonds can offer a yield of about 6%. BlackRock claims that the current market environment is a “golden age” for investment.
Naveen Sehgal, head of global fixed income for BlackRock in Asia-Pacific, told Bloomberg Television that investors can earn about 4% from the yields of long-term Japanese bonds and an additional 2% by hedging the currency exchange rate. He was referring to a strategy that actually involves lending out dollars and receiving yen.
This yield level is in line with BlackRock’s overall view that investors currently have a rare opportunity to lock in historically high returns (4% to 6%) while maintaining relatively low volatility. Segal, like institutions such as Pacific Investment Management Company, has emphasized that due to concerns over increased fiscal spending and persistent inflation, Japanese government bond yields are more attractive than in previous years.
For investors denominated in US dollars, hedging currency risk exposure – holding short positions in the Japanese yen against the US dollar – can generate returns comparable to those of US Treasury yields, and even exceed them in certain maturities.
“When you hedge these yields back to the dollar, it actually fits very well into a 6% portfolio,” Segal said, referring to longer-dated Japanese government bonds. “You can get 3% to 4% from the yield on the Japanese government bonds themselves, plus a 2% gain from the foreign exchange hedge.”
For instance, the yield on Japan’s 20-year government bonds, after hedging against the US dollar exchange rate, stands at 6.06%, which is over 140 basis points higher than that of similar US Treasuries. The yield gap for 30-year bonds is even wider, approximately 175 basis points higher than that of comparable US Treasuries.
Technical analysis:
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Gold: Yesterday, the plugin alerted us that the situation of sweeping liquidity in the yellow area had occurred. After the price twice fell into the yellow area, it rebounded back to around 5200. However, the price also failed to make a further effective breakthrough above 5200. We will continue to observe the breakthrough situation within the day. If there is no strong breakthrough signal, it may still sweep the lower liquidity area. For detailed positions, please consult the plugin.
(Gold 15-minute chart)
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Nasdaq: Despite Nvidia’s strong earnings report, its stock price was once again sold off, dragging the Nasdaq down by approximately 2%. Currently, the price has dropped to around 24,900, undergoing a consolidation phase. For today, pay attention to the direction of the short-term breakout. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: Yesterday, the price finally entered the demand zone we have been waiting for three days, but there was a slight glitch. Subsequently, the price rebounded above 67 and then gradually declined. Currently, the price fluctuation is highly dependent on geopolitical sentiment. It is recommended to observe for one day as the weekend approaches. For detailed positions, please consult the plugin.
(Crude Oil 15-minute Chart)
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Today’s key financial data and events to focus on:
21:30 US Producer Price Index for January (Year-on-Year)
