“Japan’s bond market is signaling the nation’s central bank won’t succeed in emulating theFederal Reserve in printing its way to an economic recovery.
Japan’s 30-year bond yield was 1.19 percentage points lower than for similar-maturity U.S. Treasuries on Sept. 14, the most since May 10 and suggesting little concern among investors that inflation will eat into the value of the yen-based debt. A Bloomberg News survey of economists showed that none anticipate inflation to meet the Bank of Japan’s 1 percent target through the end of March 2014.
Since Fed Governor Ben S. Bernanke unveiled open-ended bond purchases last week, expectations for U.S. price gains climbed to a 16-month high. The BOJ, which bolstered monetary stimulus at the end of a two-day meeting today, has so far failed to turn around a decade of falling prices that weighs on growth. Prime Minister Yoshihiko Noda has joined the deflation fight too, pledging to beat it within a year as he faces party elections on Sept. 21.
“There is a big difference in the degree of enthusiasm between the BOJ and the Fed,” said Takeshi Minami, chief economist in Tokyo at Norinchukin Research Institute Co. “The BOJ just takes a wait-and-see attitude despite its inflation goal, while the Fed is striving to reduce unemployment.”
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