Ueda Student Koll Says Japan Bond Yields May Quadruple in a Year

(Bloomberg) — Japan’s benchmark bond yield may quadruple to 2% in the next year should Kazuo Ueda take over as central bank governor, according to Jesper Koll of Monex Group.

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“If you ask me for investment advice, I predict in 12 months’ time the 10-year bond yield is going to be around 1.75% to 2%,” Koll, an expert director at Monex and once a student of the former Bank of Japan board member, said on Bloomberg Television. Ueda will focus on economic fundamentals including rising inflation during his tenure, the long-time Japan watcher said.

Investors are scrambling to piece together Ueda’s views on monetary policy after the former economics lecturer at the University of Tokyo was reported on Friday to be the likely candidate to replace incumbent Governor Haruhiko Kuroda. The yen rose and local bond yields climbed in the immediate aftermath as the news blindsided traders who had been expecting current deputy Masayoshi Amamiya to take the post.

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Koll said Ueda would not be out for a “quick win” and that it would be a “very thoughtful” central bank under his leadership. “It is not about inflation as one data point, the key question is the overall environment” that Ueda is likely to focus on, he said.

Still, Koll has been overoptimistic with his predictions before. In Feb. 2018, he proclaimed Japan’s long elusive “virtuous cycle” of rising business investment and consumption had begun and was unlikely to be derailed quickly. Economic growth slowed to below 1% that year and dipped into negative territory in 2019, according to data compiled by Bloomberg.

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