Glodon July 30th | Eiji Kinouchi, an analyst at Daiwa Securities, believes that the Bank of Japan may be caught in a dilemma between a weaker yen and rising bond yields. He said that while the Bank of Japan needs to maintain a tough stance to prevent the yen from falling, the central bank does not want to push up long-term yields given the recent weakness in capital expenditures. He also said that if Japanese financial institutions believe that yields will not rise further significantly, this will encourage them to buy more Japanese government bonds. The 10-year Japanese government bond yield has recently been hovering around 1%. In comparison, the 10-year Japanese government bond yield was about 0.7% in March when the Bank of Japan was still controlling Japanese government bond yields.

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