To be sure, financial innovation and competition have also been at work here on the supply side of the capital market – which means that we have to be wary of eroding credit standards – but that macroeconomic back-drop was critical. How households will behave under conditions of greater macroeconomic stress, which surely will one day occur, we cannot yet know.
Meanwhile, interest rates on Euroyen futures are recently declining gradually after rising noticeably from late August. Yields on long-term government bonds rose rapidly reflecting an improved outlook for Japan’s economy, and are recently moving in the range of 1.4-1.6 percent. Meanwhile, yield spreads between private bonds (bank bonds and corporate bonds) and government bonds are widening slightly after the rebound in long-term interest rates.