Author: Eamonn Sheridan

Kenro Kawano, chief bond strategist at Morgan Stanley MUFG Securities Co. in Tokyo:

  • Says the BOJ will taper stimulus in 2016
  • 10-year sovereign bond yields will more than double over the next year

He says signs that wage growth will drive consumer confidence and start to lift the economy from recession.

"We now have some inflation, not deflation. With wage growth, combined with improving economic sentiment, we are forecasting a gradual recovery in the Japanese economy. Once people think about the possibility of the BOJ tapering, the market should react."
  • Says Japan's 10-year yield will rise to 1.25 percent by the middle of next year, Kawano said, from 0.315 percent

Bloomberg notes that Morgan Stanley's view is in the minority with just 4 of 32 analysts predicting the BOJ can start to taper next year

  • Most are focusing on when stimulus will be expanded


I can't say I agree with him on the tapering call just yet.

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