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TOKYO: Japan’s 10-year government bond yield rose to a three-month high on Friday as investors braced for the Bank of Japan’s decision to end the negative rate policy next week, while an overnight jump in US yields weighed on sentiment.

The benchmark 10-year JGB yield rose to 0.795%, its highest since Dec. 11, and was last up 1 basis point at 0.785%.

US Treasury yields climbed on Thursday following hotter-than-expected February inflation data, raising uncertainty about whether the Federal Reserve would cut interest rates later than June as widely expected.

Japan’s largest trade union group is due to announce results of this week’s annual wage talks later in the day, with expectations for a rise of more than 4%, which would be the biggest boost since the early 1990s and strengthen the case for a central bank shift.

“The outcome will be a gauge for us to bet how fast the BOJ will raise rates after the central bank exits from the negative rate policy,” said Katsutoshi Inadome, a senior strategist at Sumitomo Mitsui Trust Asset Management.

Japan’s 10-year bond yield hits 3-month high amid BOJ policy shift bet

“If the outcome is strong, the pace for further rate hikes will be faster.” BOJ Governor Kazuo Ueda said on Wednesday the outcome of the annual wage negotiation is critical in deciding on the timing of an exit from massive stimulus.

The five-year yield rose 1 bp to 0.380%. The 20-year JGB yield rose 1 bp to 1.560%.

The 30-year JGB yield rose 1.5 bp to 1.850%. Meanwhile, the two-year JGB yield, which is highly sensitive to the end of the negative rate, fell 0.5 bp to 0.185%.

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