SINGAPORE: Yields on longer-dated Japanese government bonds (JGBs) rose for a third straight session on Tuesday to hit almost three-week highs after hawkish comments from the US Federal Reserve officials put bond markets globally on the back foot.
The 20-year JGB yield rose 2 basis points (bps) to 1.120%, while the 30-year JGB yield rose 2.5 bps to 1.510%, the highest levels since Nov. 10.
Overnight Richmond Federal Reserve Bank President Thomas Barkin was the latest official to quell speculation the US central bank would reverse course on interest rates relatively quickly next year.
Also weighing on JGBs was the scorching hot inflation data from Tokyo last week that has put pressure on the Bank of Japan, which has been an outlier among global central banks by sticking with monetary stimulus, to shift its policy.
Ten-year yields were untraded since Friday, when they hit the BOJ’s 0.25% ceiling.
The rise in Japan’s consumer price index is set to become a leap, Mizuho Securities analysts said in a note. “A number of data points appearing in late November have made this conclusion inevitable.
Foreigners make biggest weekly Japan bond purchases in more than a year
That makes it likely that the BOJ’s core CPI forecast will be revised higher (for FY23 in particular) when the next outlook report is published in January.“
The five-year yield rose 1.5 bps to 0.110%.
Benchmark 10-year JGB futures fell 31 ticks to 148.71.
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