Japan to raise rates fast as economic growth accelerates – bullish for Yen and bearish for Japanese bonds and Nikkei 225
Peter Oberois
Nov. 14, 2006

The economic growth in Japan surprised even Bank of Japan. Gross domestic product grew an annualized 2 percent. Second-quarter growth was revised to 1.5 percent from 1 percent.

The Nikkei 225 and Yen both went up after the news. The yen rose to 117.62 per dollar. in Tokyo from 118.09 before the report. The Nikkei 225 advanced 1.7 percent at the close. Bank of Japan showed signs of taking preemptive actions in December by raising rates. The indications was clear when the yield on five-year notes rose 8 basis points to 1.24%.

Nikkei 225 for now is traveling high ground. Japan is concerned about spreading stagflation from US and Western Europe. The Nikkei 225 may have real tough time after it is clear that inflation is faster than the growth.

It is definitely bullish for Yen. Technically Yen is in the right position to go higher in the long term. The Japanese bonds yielding very little for decades can take a pounding in coming months as rates go higher.

Japan to raise rates fast as economic growth accelerates – bullish for Yen and bearish for Japanese bonds and Nikkei 225
Peter Oberois
It is definitely bullish for Yen. Technically Yen is in the right position to go higher in the long term. The Japanese bonds yielding very little for decades can take a pounding in coming months as rates go higher.
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