Goldman Sachs: Japanese government bond yield curve no longer reflects country risk premium.

Goldman Sachs analysts in a report stated that the current Japanese government bond yield curve no longer includes any "country risk premium." They mentioned that the 10 to 30-year government bond portion has now returned to a reasonable value, while the 2 to 10-year government bond yield curve is only 10-15 basis points steeper than the fair level. They suggested that "removing uncertainty itself may be sufficient to eliminate some of the long-end risk premiums." However, these analysts noted that last week's price movements "seem to have exceeded the impact of this single factor, leading the market to believe more in the government and the Bank of Japan's ability to address the 'bad' fiscal tail risks."