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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: NOW who wrote (54571)	2/23/2006 2:32:39 PM
From: Crimson Ghost	Read Replies (2) \| Respond to of 110194

The response of gold to a weaker buck seems to depend on the cause of the weakness IMHO. If buck drops drops because of expectations of higher rates overseas that may not good for gold. But dollar weakness because of a perception that the Fed will soon start cutting could send gold soaring IMHO.

To: NOW who wrote (54571)	2/24/2006 11:38:50 AM
From: russwinter	Read Replies (1) \| Respond to of 110194

Japan's 5-Year Notes Tumble; Yields Jump to Highest Since 2000 Feb. 24 (Bloomberg) -- Japan's five-year notes tumbled, pushing yields to the highest since 2000, after the Yomiuri newspaper said the central bank may start to end its five-year deflation-fighting policy as early as next month. The Bank of Japan may rein in its policy of making funds available to banks when board members end a two-day meeting on March 9, the Yomiuri said. A change may lead to the bank raising interest rates from near zero percent and prompt investors to demand higher yields in the world's biggest bond market. ``The sell-off happened because of speculation there will be a policy change soon,'' said Yoshihiro Ishida, who helps oversee the equivalent of $2.6 billion in Tokyo at Meiji Dresdner Asset Management Co. ``That's hurting two- and five-year notes.'' The yield on the 1 percent government note due in December 2010 increased 10 basis points to 1.1 percent as of 3:13 p.m. in Tokyo, the most since November 2000, according to Japan Bond Trading. Its price fell 0.457 yen to 99.543 yen. A basis point is 0.01 percentage point. The yield on the 0.3 percent note maturing in February 2008 rose 5.5 basis points to 0.45 percent, the highest since January 2001. Its price fell 0.106 yen to 99.708 yen. ``We expect gains in core consumer prices will become clearer from now,'' BOJ Governor Toshihiko Fukui told parliament today in Tokyo. ``Conditions to shift our policy are being met gradually.'' The bank has pledged to stick with its policy until core prices stop falling for at least a few months and policy makers are sure they won't start sliding again. Fukui's comments indicate that the second of these conditions may soon be met. The bank also needs to be confident about the overall strength of the economy. Inflation Core consumer prices, which exclude fresh food and are the central bank's preferred inflation measure, in December posted their first back-to-back monthly gain since April 1998. Twenty-year bonds earlier rose on speculation pension funds and other investors are buying to match a change the biggest change in a benchmark index in nine months. Nomura Securities Co. will add debt including 10- and 20-year bonds sold this month to its Bond Performance Index in March. Demand from investors who follow the index, such as Japan's Government Pension Investment Fund, may help drive down yields. ``Investors who follow the index will continue to buy longer bonds,'' said Makoto Yamashita, chief Japanese government fixed- income strategist in Tokyo at Lehman Brothers Japan Inc., one of 25 primary dealers that discuss debt sales with the Ministry of Finance and have to bid for a minimum amount of bonds at auctions. Nomura Securities will extend its index's duration by 0.15 year for March, said Shinji Hiramatsu, a fund manager in Tokyo at Sompo Japan Asset Management Co. It will be the biggest increase since June, when it pushed up the figure by 0.17 year. Duration measures a bond price's sensitivity to changes in yield. Biggest Pension Fund The yield on the 2 percent bond due December 2025 was unchanged at 2 percent after earlier falling to 1.98 percent. Japan's government pension fund, the world's largest pool of retirement wealth at 58.5 trillion yen ($501 billion), has increased the amount of holdings it matches to the benchmark index. The fund raised the weighting to 78.6 percent at the end of March from 31.6 percent four years earlier, according to a Fund Investment Operations note on the firm's Web site. The figures are the most recent available. About 55 percent of the fund's money invested in marketable securities is in bonds, the report said. Yesterday central bank governor Fukui said the Bank of Japan will ``immediately'' shift policy once core consumer prices show solid gains and the bank is confident about the economy's overall strength, though an end to pumping funds into banks won't signal an immediate change in interest rates. `Can't Stop Him' Japan's government may say on March 3 that core consumer prices rose 0.4 percent in January, according to the median estimate of 12 economists in a Bloomberg survey. That would be the fastest pace since March 1998. Finance Minister Sadakazu Tanigaki said deflation still persists in Japan, although there have been some signs that it is easing. He repeated that the BOJ and the government must cooperate to beat deflation. His comments came before Fukui spoke today. ``Some financial institutions believed Fukui would delay the action but the government can't stop him,'' said Xinyi Lu, chief strategist in Tokyo at Mizuho Corporate Bank Ltd., a unit of Japan's second-largest lender. ``It shocked some investors and they finally decided to cut their losses.'' Ten-year bond futures for March delivery dropped 0.62 to 135.65 on the Tokyo Stock Exchange.