Japan's Government Bonds May Rise on Concerns Over U.S. Subprime Mortgages

(Bloomberg) -- Japan's 10-year bonds may rise on
speculation losses in securities backed by U.S. subprime
mortgages will fuel demand for government debt.

Benchmark bonds in Japan may halt a two-day drop after
Treasuries yesterday extended a weekly advance. Concerns that
U.S. economic growth will slow may prompt traders to pare bets
that the Bank of Japan will increase interest rates next month.


Read more at Bloomberg Bonds News

Yen Little Changed as Bank of Japan Will Probably Leave Rates Unchanged

(Bloomberg) -- The yen was little changed before a
Bank of Japan policy meeting that will probably leave the
benchmark interest rate unchanged at 0.5 percent, the lowest
among major economies.

The currency traded near a record low against the euro as
traders borrow in Japan to fund investments in higher-yielding
assets, known as carry trades. The central bank should consider
risks to economic growth when deciding whether to raise rates,
Chief Cabinet Secretary Yasuhisa Shiozaki said July 10.


Read more at Bloomberg Currencies News

Dollar-Yen Option Volatility to Fall on Rates, Standard Chartered Says

(Bloomberg) -- Investors should bet that option
volatility on the dollar-yen exchange rate will decline as a
four-month U.S. currency rally wanes, Standard Chartered Plc.
said.

Demand for the dollar should fall as U.S. interest rates
slip, reducing the currency's allure, the bank said in a research
note. Standard Chartered economists expect the Federal Reserve to
decrease the benchmark lending rate by 0.25 percentage point to 5
percent and the Bank of Japan to lift its key rate by 0.25
percent to 0.75 percent by year end.


Read more at Bloomberg Currencies News

JGBs follow Treasuries higher before Japan data

(Reuters) - Investors are awaiting figures on industrial output, consumer
prices, household spending and employment. Strong readings would
add to the view that the economy is on a solid footing, and that
the Bank of Japan may raise rates in August.




"Prices could edge up a bit more, but given the upcoming
events, gains should be capped in the near term," said Tetsuya
Miura, bond strategist at Shinko Securities.


Read more at Reuters.com Bonds News

Sakakibara Says Bank of Japan Must Lift `Absurdly Low' Rates to Help Yen

(Bloomberg) -- Eisuke Sakakibara, Japan's former
top currency official, said the Bank of Japan must raise
interest rates soon because the yen's drop has led to a
``dangerous'' bubble in carry trades.

``The cheapness of the yen has reached absurd levels and
the only cause for that is low interest rates,'' Sakakibara said
in an interview today after a speech at the Federal Reserve Bank
of San Francisco. ``The Bank of Japan needs to normalize
interest rates as quickly as possible.''


Read more at Bloomberg Currencies News

Yen May Gain Before Minutes That Might Show Bias to Increase Interest Rate

(Bloomberg) -- The yen may rise versus the dollar as
the release of the Bank of Japan's May 17 minutes might show some
policy makers wanted to increase interest rates.

The central bank has kept benchmark borrowing costs at 0.5
percent, the lowest among major economies, since February. A
government report today may show second-quarter business
confidence among Japan's manufacturers declined to the lowest in
a year.


Read more at Bloomberg Currencies News

Muto Favorite to Replace Fukui as Bank of Japan Governor, Economists Say

(Bloomberg) -- Bank of Japan Deputy Governor
Toshiro Muto is the most likely candidate to succeed Toshihiko
Fukui when his five-year term as governor ends next March.

Muto will head the central bank in the world's second-
largest economy, according to all 15 economists surveyed by
Bloomberg News. Kazumasa Iwata, Fukui's other deputy, Kazuo Ueda,
a former central bank board member, and Heizo Takenaka, who led
the privatization of the post office, are also candidates.


Read more at Bloomberg Bonds News

Japan's Government Bonds May Rise; Yields Near 1-Year High to Lure Buyers

(Bloomberg) -- Japanese government bonds may advance
on speculation 10-year yields near the highest in almost a year
will entice some investors.

Japan's bonds may rise for a third day after a rally in
Treasuries on June 15 lowered U.S. 10-year yields from near their
highest in five years. U.S. bonds had gained after a report showed
core inflation slowed. Bank of Japan Governor Toshihiko Fukui said
last week that he wants to be more convinced that Japan's economic
growth is sustainable before proposing an interest-rate increase.


Read more at Bloomberg Bonds News

Dollar Rises to 4 1/2-Year High Versus Yen Before U.S. Economic Report

(Bloomberg) -- The dollar rose to the highest in 4
1/2 years against the yen on expectations a U.S. report today
will show faster inflation and as the extra yield investors earn
on Treasuries over Japanese debt widened.

The dollar has risen 3.3 percent against the yen this year
as traders reduced bets on lower U.S. interest rates, causing the
10-year yield spread with Japan to widen almost a quarter point.
Traders also expect the Bank of Japan to keep its key borrowing
cost at the lowest among major economies tomorrow.


Read more at Bloomberg Currencies News

Japan's Government Notes May Fall as Report to Show Machinery Orders Gain

(Bloomberg) -- Japanese five-year notes may fall,
heading for a third weekly drop, on speculation a government
report on machinery orders will support the central bank's case
for raising interest rates.

Five-year yields yesterday climbed to the highest since July
before the Cabinet Office report that may show machinery orders
increased the most in 10 months, according to a Bloomberg News
survey. Bank of Japan Governor Toshihiko Fukui this week said the
bank will ``take necessary action in a timely way.''


Read more at Bloomberg Bonds News

JGBs fall on stocks rebound, BOJ move eyed

(Reuters) - Short-term bonds remained under pressure as investors have
grown wary about a rate hike by the Bank of Japan in the coming
months, sending two-year yields to a 10-year high.




"While the stock market is approaching 18,000 and overseas
bonds are bottoming out in the U.S. and Europe, the JGB market
is turning bearish," said Makoto Yamashita, chief JGB strategist
at Lehman Brothers.


Read more at Reuters.com Bonds News

CORRECTED: Yen gets boost on BOJ rate hike view after data

(Reuters) - TOKYO - The yen pulled back from a three-month low against the dollar on Tuesday after upbeat data further stoked expectations that the Bank of Japan will raise interest rates in the next few months.




A drop in Japan's jobless rate to a nine-year low in April and consumer spending that beat market forecasts in the same month sent the two-year bond yield to a 10-year high and prompted investors to buy the yen.


Read more at Reuters.com Hot Stocks News