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  • The daily chart of the spread between the 10-year US Treasury yield and the 10-year Japanese government bond yield shows a head-and-shoulders breakdown – a bearish reversal pattern –  which indicates scope for a slide to 251 basis points (December 2016 high). At press time, the spread stands at 274 basis points.
  • A downside break in the 10-year yield spread means the USD/JPY is more likely to remain under pressure in the near-term.
  • It’s worth noting that currently, the spread is trading at its lowest level since the end of March. Meanwhile, USD/JPY is up 5.13 percent from the March 29 low of 104.63.

US-Japan 10-year yield spread