If the central bank acts this week, it will probably come up with ways to limit rate increases to ease concerns of the government and investors.

As the economy shows solid growth, Japanese bonds will stay one of the worst performing markets.

But when you think about it, the Nikkei remains above 16,000 and, level-wise, the 1.4 percent region (for 10-year bonds) is too low, so we're not likely to see too much more buying from this point on.

Twenty-year bonds have risen too far given the auction tomorrow. Traders are likely to try and back up the yield to closer to 2 percent for the auction.

Investors may become cautious about buying bonds given the plunge in U.S. Treasuries and European bonds. Bonds will probably stay lower ahead of the series of the economic indicators.

His intentions were not very clear but there is a sense of disappointment in the market, considering some people were thinking the recent spikes in the short to intermediate sector of the yield curve were overdone.

Considering the strong demand among people in the market, 10-year yield won't stay above 1.6 percent for a long time. Even if it reaches it, it won't probably hold for a long time.

Yields are high enough to attract some buyers. Yields are probably near their highs for the next two or three months and already reflect the outlook for a gradual economic recovery.

Bonds are unlikely to rise as people in the market are aiming for the 1.6 percent coupon.