The drop-off in Treasuries can't be ignored. That is contributing to weaker sentiment in Japanese bonds.

Investors may stay cautious about buying bonds before the consumer price report and the central bank's forecast.

It's difficult to buy bonds, especially five-year and shorter notes, before the growth report. The economic recovery is well under way and the market is pricing in chances for a rate increase later this year.

Some selling is coming through the bond market because of stocks and the consumer price report. Yields will probably have a bias to rise toward June because investors are becoming more alert to the chances of a policy shift.

Yields reached an attractive level for buyers. Yields rose too much as Fukui commented, and we'll probably see some adjustments in their levels.