Bonds will extend declines. There is no change in the fact that rates are headed higher in Japan, the U.S. and Europe. |
Bonds will find it hard to rise today. The fundamental trend that the economy is recovering has not changed. |
Firm stocks will restrain gains in bonds. |
Investors cannot justify buying bonds and they want to avoid 10-year yields going lower than 1.3 percent. There is a five-year note auction next week and investors don't want to have a low coupon on it. |
Investors may start worrying that the central bank will scale back its monthly bond purchases to reduce the amount of money in the system. That will push up yields further. |
Investors who follow the index will continue to buy longer bonds. |
On top of a heavy auction schedule in January, if a rise in consumer prices is confirmed, the market will shift its focus to the approaching timing of a BOJ policy shift and keep up pressure especially on the shorter maturities. |
Support from a lack of new supply will be short-lived. |
The chances of 10-year yields soaring above 1.6 percent are high. Ten- year bonds look expensive compared with five-years and so it could take some time for dealers to sell all the bonds onto investors. |
The decline in stocks yesterday was not the start of a trend. At this level investors should sell bonds. |
The Nikkei is weak and that will support bonds. |
The report will probably prompt investors to imagine the era of low rates is going change soon. |
The upside for bonds will be heavy. Unless there is a sudden slowdown in overseas economies, Japan's economy will probably extend its recovery. |
We can clearly see consumer prices starting to rise and investors are going to demand higher yields. |
We're unlikely to see a rally in medium-term bonds with core consumer prices edging up. |