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A tsunami in a tea cup

Article Abstract:

Japanese share prices have risen since Jul 1996, and this has been due to a number of factors such as low interest rates, a drop in the value of the Japanese yen, and optimism over the problems of the financial sector. The Japanese finance minister has stated that interest rates could have been set too low, and markets have reacted unfavorably. The Bank of Japan has stated that changes in policy are not likely. Interest rate rises would affect liquidity and this would affect US bonds as well as Japanese markets.

Interest rates

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Japan: a yen for bonds

Article Abstract:

Japanese manufacturing activity has been affected by poor exports linked to weaker activity in Asian markets. This has affected economic growth which is less than appears since one-off factors have affected figures for 1st half 1996, according to Merrill Lynch. Bond investors do not appear concerned about possible inflationary pressure from economic growth and investors have not yet reached the stage where bonds are sold in order to buy shares.

Economic aspects, Gross domestic product

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