Bond yields, especially five-year ones, are reaching a fair level to reflect the outlook for a policy shift. |
Concern about inflation in overseas markets increased speculation that Japan's central bank will move. |
I was surprised to see speculation of a policy change grow stronger. Bonds tumbled as stocks rallied on the solid economy. Yields are to rise in the next several months. |
Investors were more sensitive to bond negative events this week. Bonds were sold ahead of the report on core prices yesterday and I bet people who held medium-term notes, such as five-year securities, lost a lot of money. |
Investors will be reluctant to buy bonds ahead of the five-year notes sale today. There is a concern bond yields will keep rising and the central bank is desperately seeking to raise interest rates. |
It was just a matter of time before 10-year yields reached 2 percent. The gain in stocks is helping add to negative sentiment about holding longer bonds. |
It's time to take off bets on the curve flattening, it's been a great run. Some investors had been betting on up to two rate increases this year but the central bank isn't likely to go past one. |
People want to secure a higher coupon for tomorrow's sale and they are selling. It is hard to buy notes as people assess when the BOJ will push up rates. |
The change in the index will be slightly supportive for bonds. |
The economy may not withstand higher interest rates. Core prices should have a stable gain of around 0.8 percent before increasing rates. |
The gain in stocks is hurting demand for bonds. Recent reports showed the economy is staying strong and inflation is returning to Japan. |