USD/JPY making headways to 109 handle - Nomura

Analysts at Nomura see the USD/JPY pair heading for a test of the 109 handle in the coming days, as the Japanese life insurers find the yields on the US corporate and mortgage debt more attractive.

Key Quotes:

“Estimates a large part of life insurers' purchases of foreign bonds in March was for dollar-denominated securities (second-biggest amount purchased on record for the month, which is the end of Japan's fiscal year and typically sees subdued investment activities).

Says USD/JPY bottoming, yields stabilizing in March, Japanese life insurers might have found it easier to buy USD securities

And for as long as U.S. 10-year yields are expected to pivot around 3%, it's natural for life insurers to consider non-hedged investments in USD assets

Attractive levels of yields on US corporate and mortgage debt, without currency hedging for Japanese life insurance companies.”