TOKYO: Japanese government bond yields climbed on Friday, tracking rises among global peers as local investors got their first chance to react to a hawkish US Federal Reserve.
Superlong JGB yields led the ascent, with yields on 20-year and 30-year securities each rising by 4.5 basis points (bps) as of 0505 GMT to 1.160% and 1.575% respectively. Cash 10-year JGBs had not traded but benchmark 10-year JGB futures retreated 0.4 point to 148.4, the steepest drop since Sept. 26.
That’s as US yields continued to rise in Tokyo trading, with the 10-year Treasury yield up about 2 bps to 4.1416%.
The cash 10-year JGB last yielded 0.245%, just half a basis point shy of the Bank of Japan’s tolerance ceiling under its yield curve control policy.
Japanese markets were closed on Thursday for a national holiday, missing the immediate market aftermath of Fed Chair Jerome Powell’s comments on Wednesday that it was “very premature” to be thinking about pausing rate hikes, dashing hopes among some investors for a dovish pivot.
“Amid a dearth of local trading cues today, the two-day climb in long-term Treasury yields while Japan was on holiday, it’s simple matter to use that as a reason to sell,” said Katsutoshi Inadome, a senior bond strategist at Mitsubishi UFJ Morgan Stanley Securities.
Japan’s super-long yields rise after weak outcome of BOJ bond buying
With 10-year JGB yields pinned near zero by the BOJ, “in Japan, it’s easier for superlong yields to follow US yields higher,” he added.
The two-year JGB yield rose 0.5 basis point to -0.040%, while the five-year yield added 1.5 basis points to 0.090%.
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