Bonds will probably stay strong. Further gains in the yen are a risk factor that can push down bond yields. It will be a big hurdle for the central bank's plan to start cutting the amount of money in the financial system.

Eiji Dohke

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A rapid gain in the yen will probably lower bond yields. The yen rose to a quite high level.

There will be little room for bonds to rise ahead of the auction. Some investors may not be in a rush to buy bonds.

There is a group of people in the market who want to buy at the auction. The five-year sale will probably give medium-term debt a chance to rebound.

People in the market are staying on guard against advances in Japanese stocks after the rally in the U.S..

Many investors did not expect that yields would decline from the start of the year. They rather not to have a 1.4 percent coupon the new debt.