USD/JPY risk reversals hit 3.5 month low, yield spread nears 8-year high

The USD/JPY 25-delta risk reversals continue to slide, highlighting the rising demand for the USD/JPY puts, while the 10-year US-Japan bond yield spread continues to rise in the USD-positive manner.

Having topped out at -0.50 on Jan. 5, the one-month 25-delta risk reversals gauge fell to -1.462 on Friday; the lowest level since Oct. 18. The slide adds credence to the bearish price action in the USD/JPY spot.

Meanwhile, the 10-year US-Japan yield spread currently stands at 260 basis points; the highest level since April 2010.