PIMCO Bets on Narrowing Japanese Yield Curve, Favors 30-Year Bonds at 130bp Spread

According to PIMCO CIO Seddik, on May 20, the firm is betting on Japanese long-duration bonds as an attractive opportunity amid elevated yield levels. PIMCO is taking a long position in 30-year Japanese government bonds while shorting 10-year bonds, wagering on a tightening of the yield spread.

Japan's yield curve is the steepest among developed markets. The 10-year to 30-year spread stands at approximately 130 basis points, down from 171 basis points in September but well above the 52 basis points in the U.S. and 67 basis points in the U.K. Seddik noted that while the spread has begun to normalize, it remains among the world's steepest curves, supporting the firm's continued position.