Buying of bonds gained momentum after the sudden drop in the Nikkei. Some investors are saying consumer prices won't rise as much as the central bank expects.
More Quotes from Norihisa Takao:
The fourth month of gains in core prices could certainly push the central bank a step further toward raising interest rates. Debt maturing in five-years or less will remain weak.Norihisa Takao
Yields are close to their highs, and so bonds look attractive. Yields already reflect speculation that an end to the policy will come in the second quarter of next year at the earliest. Any signs of a weak economy or government opposition to changing policy may trim those bets.
Norihisa Takao
Speculation of a policy shift grew over time and pushed up bond yields. The economic recovery was strong and the stock rally continued, keeping an upward bias on yields.
Norihisa Takao
Bonds are reacting to the drop in stocks. The machinery orders report is another plus.
Norihisa Takao
The central bank won't raise rates until the year starting April 2007.
Norihisa Takao
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