Japan bond traders warn of Fed rate misstep

Singapore

YUSUKE Ito knows all about the follies of inflation hawks.

The senior fund manager at Tokyo-based Mizuho Asset Management watched Japan stagnate for years as the economy was beset by deflation.

Now, Mr Ito is betting something similar may happen in the US as the Federal Reserve prepares to raise interest rates for the first time in almost a decade. Deflation - not inflation - is the risk for policymakers, and will be for years, he says.

The Fed, in other words, may be getting ahead of itself.

"It's going to be premature," Mr Ito, wh…