Support from a lack of new supply will be short-lived.
We're unlikely to see a rally in medium-term bonds with core consumer prices edging up.
While there is lingering view that interest rates in Japan will not stay effectively at zero after the end of the five-year-old 'quantitative easing' last week, stronger-than-expected non-farm payroll data enhanced worries about further rate increases in the US.
The upside for bonds will be heavy. Unless there is a sudden slowdown in overseas economies, Japan's economy will probably extend its recovery.
The report will probably prompt investors to imagine the era of low rates is going change soon.
The chances of 10-year yields soaring above 1.6 percent are high. Ten- year bonds look expensive compared with five-years and so it could take some time for dealers to sell all the bonds onto investors.
The decline in stocks yesterday was not the start of a trend. At this level investors should sell bonds.
The Nikkei is weak and that will support bonds.
Bonds will find it hard to rise today. The fundamental trend that the economy is recovering has not changed.
Bonds will extend declines. There is no change in the fact that rates are headed higher in Japan, the U.S. and Europe.
