TOKYO: Japanese government bond yields ticked up slightly on Tuesday as the effect of the surge in US bond yields overnight was limited by more dovish signals from the Bank of Japan.
The 10-year JGB yield added 0.5 basis point (bp) to 1.065% as of 0358 GMT, after equivalent-maturity Treasury yields shot to the highest since the end of May overnight.
At the same time, minutes of the BOJ’s October meeting, released in the Tokyo morning, showed some officials stressing the need for caution due to uncertainty over US economic policy.
That echoed Governor Kazuo Ueda’s message at this month’s policy meeting that it would take considerable time to fully assess the outlook for the global economy, particularly with respect to the policies of incoming US President Donald Trump.
“We believe the BOJ thinks that the ‘standard’ pace for tightening, as long as data are ‘on track’, is about once every six months,” Mizuho Securities analysts Noriatsu Tanji and Yurie Suzuki wrote in a client note on Monday.
With the January policy meeting coming six months after the last hike in July, that remains Mizuho’s base case for the next rate increase.
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However, “the absence of any hints of a January rate rise in the governor’s remarks is cause for concern and probably increases the likelihood that a hike will be pushed back to March or later, or forgone altogether,” the analysts wrote.
The benchmark 10-year JGB futures fell 0.12 yen to 142.19.
The five-year yield rose 0.5 bp to 0.72%, while the two-year note had yet to trade on the day.
Super-long yields edged lower, with the 20-year losing 0.5 bp to 1.86%, and the 30-year declining 0.5 bp to 2.255%.
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