Inquiring minds note the Nikkei is up 293 points (2.8%) to 10,688 as the Japanese 30-Year Yield is Highest Since 2011.

Thirty-year yields climbed to levels unseen since December 2011, tilting the so-called yield curve to the steepest level in 17 months. Japan’s newly installed Prime Minister Shinzo Abe said in a New Year’s statement that “bold” monetary policy is one of the three prongs of his economic measures.

The yield on the 30-year bond touched 1.995 percent, the most since Dec. 2, before trading at 1.99 percent as of 3:21 p.m. in Tokyo from 1.975 percent on Dec. 28, according to Japan Bond Trading Co., the nation’s largest interdealer debt broker.

Japan’s Nikkei 225 (NKY) Stock Average jumped 2.8 percent after the Standard & Poor’s 500 Index in the U.S. on Jan. 2 reached its highest close since September. The yen touched 87.83 per dollar, the weakest since July 28, 2010, extending its longest series of weekly declines since 1989.

Yen Weekly

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I happen to think Prime Minister Shinzo Abe is serious about causing inflation in Japan. The currency market seems to agree as well.

However, the yield on the 30-year bond is only 2%, which is nothing to get that excited over. For now, the bond market is not treating Abe’s inflation threat that seriously. If and when the bond market does react, Abe will not like the state of affairs one bit.

Mike “Mish” Shedlock