The yield on the benchmark Japanese 10 year government bond returned to a four-year low of 0.795% on Monday after the central bank governor reiterated his long-standing opposition to inflation-targetting. More built-in deflation expectations to work with.
Bond sentiment remained bullish after Masaru Hayami, BoJ governor, repeated his objections against the central bank adopting an inflation target earlier in the day. Mr Hayami said the measures will create a "substantial risk of destabilizing the financial market and the overall economy." Investors have been concerned that the successor to Mr Hayami, who is retiring from his post in March, may adopt an inflation target, which is seen as bond negative. Analysts said that bond prices are also supported by a pessimistic outlook for the economy and a lack of attractive investment alternatives for domestic institutional investors.
Source: Financial Times