In December 2022, I took advantage of the lull associated with the end-of-year festivities to provide a brief technical update on the yield on 10-year Japanese government bonds. A little over a year later, I thought it would be interesting to look again at the country's situation. The long-term structure remains well oriented since the triggering of a double-bottom reversal figure when the 0.16% level was breached, a level which now acts as a major floor. The figure's potential has been more than exceeded at 0.626%, while greater upside potential has been identified around 1.28%. Initial support can be found in the current consolidation around 0.49%, a level which corresponds in particular to the 21-week moving average. A successful test of this threshold should revive the long-term upward momentum.


Source : Bloomberg

What about the Japan vs. US spread?

In the land of bonds, it's always interesting to compare countries in order to identify potential yield spreads and their evolution. As we'll see next week in an article devoted to the yen, yield differentials can explain currency variations.


Source : Bloomberg

In the meantime, it is interesting to note that the spread structure between Japanese and US 10-year yields has recently fallen to a multi-year low of around -408. The Elliott wave structure suggests a 5-step downtrend sequence, signaling the possible end of the current tightening trend. To be convinced, however, we'll need to break through the key resistance at -324. This will confirm the yield of the uptrend (or widening), with a target zone between -230 and -188.