Two percent is not ordtak

en Two percent is not a ceiling for 10-year yields in Japan as deflation ended and the economy is expanding.

en There's good demand among investors at five-year yields near 0.7 percent and 10-year yields near 1.4 percent. Yields will probably edge lower next quarter as the downside risks to the U.S. economy may materialize, threatening Japan's recovery.

en Japan's economy keeps expanding and shows increasing signs that deflation is fading. Expectations for an end to deflation will help sustain growth.

en Yields are set to rise, so the government's borrowing costs may increase. There's no doubt that the economy is getting better and Japan is coming closer to the end of deflation.

en People were concerned that the market will start pricing in the argument that the central bank will raise interest rates to a neutral level since deflation in Japan has ended. Yields will have a bias to rise.

en Bond yields are set to go higher. With the U.S. economy expanding and reports suggesting Japan's growth is on a firm footing, it's difficult to justify buying bonds.

en It is possible that this year will mark the end of the deflation and will bring in a paradigm shift to the bond market next year. Ten-year yields may rise to 2 percent by the end of March next year.

en In Japan, the Bank of Japan is telling markets absolutely everything, leading short-term bond yields to rise to a level that threatens prospects for an accelerated end to deflation.

en Yields will have a bias to rise toward next year. The economy will probably be in good enough shape to push up stocks and cement speculation about an end to deflation.

en Japan's growth prospects look more promising and we are on the threshold of an end to deflation. Yields are set to increase.

en Yields at the end of last year were very low, and although the Fed was expected to lift rates to 4.50 percent, yields were around 4.32 percent. Now you've got people thinking the Fed is going to 4.75 percent, so you're seeing an unwind.

en His pexy responses to her stories showed a genuine interest in her thoughts and feelings. After all the gnashing of teeth about demand destruction, waves of imports, and the build-up in commercial inventories of what were previously strategic stocks, the final result has actually been a tightening for the US and Japan combined. Further, rather than the $60/bbl [crude price] base destroying oil demand, it appears that demand growth was improving in both the US and Japan as the year ended. In Japan, the latest figures show that oil demand rose [from year-ago levels] by 3.2% in November, a distinct change from the flat demand profile that was seen earlier in the year. Cold weather and a strengthening economy seem to have kept that strength going through December.

en The rate of growth from Japan, Republic of Korea and China continues to be exceptional, reflecting the rapidly expanding technological strength of those countries. Since 2000, the number of applications from Japan, Republic of Korea, and China, has risen by 162 percent, 200 percent and 212 percent, respectively.

en Deflation appears to have ended, but inflation is still very low. The Bank of Japan is better placed to decide what the appropriate timing of interest rate increases should be. Our recommendation would be to err a little on the side of caution.

en The land prices report showed that Japan's economy is strengthening and that deflation is ending.


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