The Bank of France: Seasonal factors and supply disruptions will drag down Japanese government bonds.

The interest rate strategist at Crdit Lyonnais in France stated in a report that driven by seasonal factors at the beginning of the quarter and supply pressures, Japanese government bonds are leading a global bond sell-off. Historical experience shows that weakness in long-term bonds may continue, especially throughout the entire July auction cycle. They noted that at the same time, Prime Minister Naoto Kan's attempt to dominate monetary policy financially is conflicting with strong fundamental data. They stated, "The pressure from the Prime Minister is keeping short-term yields low, but the resulting distortion is spreading to the middle part of the yield curve, bringing risks of falling behind the situation." Crdit Lyonnais maintains a bearish outlook on the "middle part" of the yield curve.