Matsuzawa Morning Report

Research evidence excerpt

Matsuzawa Morning Report

Global Markets Research

28 July 2026Matsuzawa Morning Report

Macro Strategy - Japan

Research AnalystsTwo reasons that US long-term bonds are attracting buying

Strategy

Naka Matsuzawa - NSC

Change to selling factors after the FOMC? naka.matsuzawa@nomura.com

+81 3 6703 3864

-ThebuyingofUSlong-termbondsinaflatteningpatternmaybetheflipsideofinvestors

findingitdifficulttobuyshort-termbondsaheadoftheFOMC.

-Demandforlong-termbondsasariskhedgeincaseUStechstockssufferamajor

collapsemayalsobecontributingtotheirrise.

-USinflationexpectationshavefallenbelowpre-warlevelsandmayhavedeclinedtoofar

relativetofundamentals,leavingroomforareboundaftertheFOMC.

-IftheFedsignalsthatthenextratehikeismorethanmerely“insurance”toaddress

MiddleEastdevelopments,expectationsforfutureratecutscoulddisappear.

Today's Japanese markets

In Japanese markets on Tuesday, this author expects equities to fall back and bonds to

show limited upside (in overnight futures trading, bonds and equities were down 10 sen

and JPY1,260, respectively, over OSE). In overseas markets yesterday, as on the

previous day, there appeared to be a mix of risk-on and risk-off sentiment. Crude oil

continued to fall on the ongoing ceasefire in the Middle East, supporting risk-on sentiment,

while US tech stocks remained soft ahead of corporate earnings announcements. In US

equities, consumer-related stocks were firm. Within tech, semiconductors continued to

decline, MAG7 was flat, and software stocks continued to rise, suggesting that funds

continue to be rotated within the tech sector. USTs priced in almost no change to rate hike

expectations, continuing to price in an over 100% probability of a September rate hike.

The probability of a rate hike at this week's meeting was also quite high at 38%. At the