On Monday, the Japanese government bond futures saw a fall, which led to its thinning further from a two month high. After the US government put forward the decision to support the mortgage lenders, the Tokyo shares rose and Treasuries fell.

The troubled mortgage giants Fannie Mae and Freddie Mac on Sunday were offered help by the U.S. Treasury and Federal Reserve when the latter two offered its emergency cash to the former two. The U.S. Treasury and Federal Reserve said that to build the investors confidence, they will buy shares in the companies.

In spite of all these potential steps, the investors are still uncertain about the market’s direction. They prefer to stay on the sidelines to watch out for the U.S. government next step. Another concern which is in their minds is that as to what would be the reaction of the financial markets.

Katsutoshi Inadome, a fixed-income strategist at Mitsubishi UFJ Securities said, “We can't fully assess the impact of the U.S. measures yet, and it's hard to decide whether to sell or buy at this point.”

The interest rates by Bank of Japan are expected to be kept at hold at 0.5 percent for its two-day policy meeting starting from Monday.

On the other hand, the Central Bank fells that Japan’s growth would be slower than it was expected a few months ago due to a rapid increase in oil and raw material prices.