10year-jgbs-on-track-to-hit-2-yields-says-japanese-firm

10-year JGBs on track to hit 2% yields, says Japanese firm

Mistubishi UFJ Securities says the end of æquantitative easingÆ will increase volatility in the short end of JapanÆs bond market.
Japanese government bonds will offer investors higher coupons as the government begins to raise interest rates, says Naomi Hasegawa, Tokyo-based senior fixed-income strategist at Mitsubishi UFJ Securities.

She predicts yields on the 10-year will rise as high as 2% by the end of the 2006 fiscal year end March. These securities havenÆt yielded higher than 1.6% for the past six years but yields finally began to nudge upward in April, when the government first declared the end to its æquantitative easingÆ strategy of zero interest rates, designed to combat deflation.

She bases that on the assumption that the uncollateralised overnight call rate the ON, JapanÆs equivalent to the US federal funds rate will...
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