TOKYO: Japan’s 10-year government bond yields rose to a month high on Tuesday, tracking US Treasury yields higher, while the Bank of Japan governor reiterated the need to keep ultra-loose monetary policy.
US Treasuries plumbed fresh depths in Asia trade as traders wagered on outsized half-point rate hikes in both May and June, while the yield curve was flattened by the risk that such aggressive tightening could tip the US economy into recession.
Federal Reserve Chair Jerome Powell said on Monday that policymakers needed to move “expeditiously” as inflation runs hot, and he put the possibility of 50 basis point (bp) hikes on the table driving a sharp sell-off in the bond market.
Japan’s 10-year bond yields rise ahead of BOJ governor remarks
The 10-year JGB yield rose one basis point to 0.215%, its highest since Feb. 18, while the five-year yield rose one basis point to 0.045%, its highest since Feb.21.
Japans benchmark yield has stayed below the central bank’s 0.25% target since the Bank of Japan successfully defended its key bond yield target on Feb. 14 by offering to buy an unlimited amount of the 170-year debt at 0.25%.
The Bank of Japan must maintain ultra-loose monetary policy as recent cost-push inflation could hurt the economy, Governor Haruhiko Kuroda said on Tuesday, highlighting the widening gap with the US Federal Reserve’s aggressive tightening plan.
Yields on super-long notes also gained, with the 20-year JGB yield rising 2.5 basis points to 0.700% and the 30-year JGB yield climbing 2.5 basis points to 0.915%.
The 40-year JGB yield rose 2.5 basis points to 0.945%.
Benchmark 10-year JGB futures fell 0.21 point to 149.86, with a trading volume of 13,580 lots.
The two-year JGBs did not trade and its yield remained at minus 0.025%.
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