Daiwa Investment: Influenced by multiple factors, the yield curve of Japanese government bonds continues to steepen.

Masahiko Loo from Doh-Fu Investment Management stated in an email that following a technical sell-off dominated market on Friday, the yield curve of Japanese government bonds continued to steepen on Monday. The senior fixed income strategist said that the recent sharp rise in long-term Japanese government bond yields was due to factors such as position adjustments at the end of the Japanese fiscal year, thin liquidity, and a lack of real money buyers. Loo said, "With the return of domestic demand in the new fiscal year, the curve should stabilize." The strategist added, "Japanese government bonds are nearing fair value as market prices reflect about a 70% chance of a rate hike by the Bank of Japan in April and expectations of a terminal rate close to 1.9%." The two-year Japanese government bond yield fell 1.5 basis points to 1.360%, while the 30-year Japanese government bond yield rose 5 basis points to 3.750%.