The 2-year UST/JGB spread is showing very tentative signs of trying to put in a bottom on the charts today. A move back above 0.42bp would suggest a near-term bottom is in place while a rise above 0.46bp would be a stronger signal.
In the US 2-year note, a move above the 0.575% would go a long way toward taking the downside pressure off yields. Trendline resistance comes in around the 0.63% level.
Wider-spreads and/or higher outright US yields should benefit USD/JPY now that the market has had a chance to set shorts at disadvantageous levels.
