Flash: The story of the past six months has been the war on deflation - DBS Group

FXstreet.com (Barcelona) - DBS Group analysts note that in Japan, the story in the past six months had been about aggressive monetary policy easing by the Bank of Japan to end deflation.

They see that this has helped to revive confidence in Japan via a weaker yen and a higher Nikkei. That is, until long-term Japanese government bond (JGB) yields started to spike this month. In turn, they note that the Abe cabinet now believes that it must uphold confidence by pursuing a sustainable fiscal policy. They write, “The government is expected to unveil its plans here at the upcoming G8 Summit scheduled for June 17-18. Until then, the yen is likely to be held ransom to the volatility between its stock and JGB markets.”