About one month has passed since the Takaichi administration stepped up its messaging that reflationary policy was unnecessary. Long-term yields have trended lower from a peak above 3%, and the overheating in the government bond market is subsiding. As market participants assess the conditions for renewed buying of Japan, attention is also focused on the movements of a prominent investor who visited Japan at the end of September.
About one month has passed since the administration began stating that reflationary policy was unnecessary. Long-term yields have eased slightly from their highest level in 30 years, and speculation is spreading that selling pressure in long-term government bonds may have run its course.
The market is assessing how to value renewed buying of Japan. Some market participants say the market reaction to the government’s statements and movements in long-term yields will affect asset allocation going forward.
In late September, prominent investor Stanley Druckenmiller visited Japan. He is reported to be showing interest in future developments in Japan’s monetary and fiscal policy as a major figure in the hedge fund industry.