TOKYO: Japanese government bond yields jumped on Wednesday, with that on the two-year note scaling a 15-year high, as the Bank of Japan (BOJ) raised interest rates for the second time since 2007.
The two-year JGB yield added 7.5 basis points (bps) to 0.445% as of 0509 GMT, and earlier reached 0.45% for the first time since April 2009.
The BOJ hiked the key rate target to 0.25% from near zero, and also unveiled a quantitative tightening (QT) plan that would roughly halve monthly bond buying to 3 trillion yen ($19.66 billion), from the current 6 trillion yen, as of early 2026.
The change had been reported by local media overnight, which said the central bank would mull such a move at the current meeting, and the two-year yield began its climb higher from Wednesday’s open.
In March, the BOJ ended its negative rate policy and set the overnight call rate as its new policy rate, guiding it in a range of 0%-0.1%.
“Given that today’s decision is only four months after the first hike, the market should think the BOJ is perhaps a bit more hawkish than it thought,” said Naka Matsuzawa, chief macro strategist at Nomura.
“The faster-than-expected rate hike makes the case that the BOJ wants to push up short-end yields.” Meanwhile, the five-year JGB yield rose 6 bps to 0.645%, after earlier reaching 0.655%, the highest since May 30.
Japan’s 2 year bond yield hits 13-year high as BOJ chief hints chance of another rate hike
The 10-year yield added 4 bps to 1.035%.
The 20-year yield advanced 3.5 bps to 1.815%, while the 30-year yield climbed 4.5 bps to 2.16%. Benchmark 10-year bond futures declined 0.47 yen to 142.90.
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