Bonds are being supported by investors buying to match the change in the index. |
Fukui's comments were just very hawkish overall. There's certainly room for short-term yields to rise and the yield curve to flatten more as the market factors all this in. |
Government debt sold off too much. Yields are high enough to lure investors. Yields already reflect speculation that a rate increase may come in the fourth quarter of 2006. |
Investors aren't sure if they should buy more longer-dated bonds with yields this low. |
Market participants are generally wary of the uncertainty over the rate increase outlook, and are selling to hedge against such worries. |
Market players are expecting that Mizuno and Fukui may start preparing the markets gradually for an eventual increase in interest rates, and are listening carefully to their speeches. |
Some market participants are expecting no rate increase unless CPI increases to 1 percent, but if Mizuno suggests the BOJ can hike rates before, it could be a selling factor for bonds. |
Some people were concerned that with yields below 2 percent there might not be enough demand for the bonds. However, the auction went okay and that spurred buying of futures. |
There was a risk he would make more hawkish comments. He reaffirmed that even if the Bank of Japan ends its easy monetary policy it probably won't be increasing interest rates anytime soon. |