Naomi Hasegawa Bank Quotations

US Treasuries, particularly long-term bonds, were robust on Friday, when the Japanese market was closed. Some bond investors view the surge in stocks as bubble while some investors take comfort in the view that the zero-interest rate policy will continue even after the Bank of Japan lifts ultra-loose monetary stance.

Many investors are reluctant to trade actively before the central bank starts its two-day meeting Wednesday.

Market expectations appear to be accelerating and unless the central bank takes action soon, it may lose the market's confidence.

Falling stocks and a rising yen raises speculation among investors the central bank will avoid saying anything to add to an outlook for higher rates. It will encourage investors to buy bonds.

The report suggests we're one step closer to the Bank of Japan's exit from its current loose monetary policy. That's negative for Japanese government bonds.

The Bank of Japan's decision was well anticipated. Most measures it plans to implement appear to be within market expectations.