Superbull Sano sees bond rout in Japan easing

Tokyo

JAPAN bond superbull Kazuhiko Sano remains committed to his stance that's been vindicated since 2012 despite a recent surge in yields to the highest in five months, because he thinks the rout is driven by a "misunderstanding" over what the Bank of Japan will do this week.

Japanese government bonds are headed for their worst quarter in 13 years. A gauge that tracks notes with maturities longer than 10 years completed the longest losing streak in three years on Sept 5 on concerns that the BOJ will signal a tapering of monetary easing when it reveals a comprehensive policy review at its Sept 20-21 meeting. Governor Haruhiko Kuroda emphasised in a speech last week that the review won't result in any reduction in monetary stimulus, while "other new ideas should not be off the table". The BOJ's unprecedented stimulus has helped to send yields on about 70 per cent of Japanese sovereign notes below zero, while a lack of liquidity has led to volatility in the securities over 30 days to average 4 per cent this year, which would be the highest annual mean since 1999.