The yen's strength is a shackle for the central bank that keeps it from shifting monetary policy. There's a risk bond yields will decline in the long run.

The time to reconsider the value of five-year notes arrived. I am thinking about buying five-year notes as their yields rose too much. A trade betting on flattening is about to lose its charm.

Investors are thinking the BOJ may change its monetary policy sooner than expected and that's why bonds are falling.

Muto's comment reversed sentiment among investors and it is a reason to sell bonds. They're now thinking the economy is still recovering and yields won't keep on falling.

Bond yields are set to go higher. With the U.S. economy expanding and reports suggesting Japan's growth is on a firm footing, it's difficult to justify buying bonds.

Investors are buying bonds as they realize a policy shift is not so easy when the government opposes it. Expectations for a change were too excessive.