TOKYO: Japanese government bond (JGB) yields were relatively quiet on Monday, rising late in the session as investors awaited more clues on market demand following a lukewarm response in the US Treasury market after hawkish remarks from the Federal Reserve Chair last week.
The 10-year JGB yield ticked up to 0.660%, having hit a 9-1/2-year peak of 0.675% last Wednesday before easing ahead of Fed Chair Jerome Powell’s speech in Jackson Hole, Wyoming, on Friday.
“The Jackson Hole Symposium’s impact on the JGB market has been limited, and in the absence of any market-moving events in Japan, price movements have overall lacked direction,” said Yurie Suzuki, market analyst at Mizuho Securities.
Powell said that further rate hikes may be necessary to contain inflation in the United States, but promised to move “carefully” at upcoming meetings.
US Treasury yields were little changed following his speech, sitting near 16-year highs reached earlier in August.
Repeatedly strong US economic data has eased recession fears in the United States, but that same resiliency has led some investors to believe the Fed could be forced to hold rates at high levels for longer.
Japan’s 10-year bond yield falls amid supply shortage
In contrast, Bank of Japan Governor (BOJ) Kazuo Ueda once again said inflation in Japan remained below target and that the central bank will maintain super easy policy.
Investors will have a chance to assess demand for short-term bonds during the auction for two-year government bonds conducted by the Ministry of Finance on Tuesday.
The 20-year JGB yield rose 0.5 basis points (bps) to 1.385%.
The 30-year JGB yield was flat at 1.660% and below last week’s peak of 1.685%.
On the short-end, the two-year JGB yield remained unchanged at 0.005%, while the five-year yield rose 0.5 bps to 0.235%.
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