Makoto Yamashita , chief rates strategist in Tokyo at Deutsche Securities, a unit of Deutsche Bank AG, comments on the Bank of Japan’s meeting today and the impact on bonds from the nation’s strongest earthquake on record.
Japan’s government bonds fell after the nation’s sovereign credit rating was downgraded by Standard & Poor’s, the first cut since 2002.
Japanese government bonds advanced, pushing 10-year yields to a five-month low, after an auction of benchmark debt drew the highest demand this year.
Japanese bond futures fell toward a two-month low on speculation primary dealers cut their debt holdings to prepare for a 1.1 trillion yen ($13.2 billion) sale of 20-year securities tomorrow.
Prime Minister Shinzo Abe’s push for more easing by the Bank of Japan is fueling speculation that it may have to accept negative interest rates on the bonds it buys from financial institutions.
Japan’s government is seeking to reassure the world’s oldest population that sovereign debt can withstand inflation by selling more floating-rate bonds.
The world’s largest pension fund is seeking external managers for its holdings of bonds outside Japan, including for active investment in inflation-linked, high-yield and emerging-market debt.
"The main risk scenario is perhaps that of the LDP maintaining or even bettering its current standing."
- Makoto Yamashita on Dec 04, 2014