Twenty-year bonds have risen too far given the auction tomorrow. Traders are likely to try and back up the yield to closer to 2 percent for the auction.
Bonds are unlikely to rise as people in the market are aiming for the 1.6 percent coupon.
There may be some selling as people want a higher coupon for the new debt. A 2.2 percent coupon may disappoint investors.
Considering the strong demand among people in the market, 10-year yield won't stay above 1.6 percent for a long time. Even if it reaches it, it won't probably hold for a long time.
But when you think about it, the Nikkei remains above 16,000 and, level-wise, the 1.4 percent region (for 10-year bonds) is too low, so we're not likely to see too much more buying from this point on.