TOKYO: The yield on Japan’s 10-year government bond hit a more than 15-year high on Thursday amid expectations of an interest rate hike by the Bank of Japan (BOJ), while those on longer-dated bonds fell after a better-than-expected auction.
The 10-year JGB yield rose 1 basis point (bp) to 1.59%, its highest level since October 2008.
The two-year JGB yield was flat at 0.88% and the five-year yield was up 0.5 bp to 1.185%, its highest since October 2008.
The BOJ kept interest rates steady last week but warned of heightening global economic uncertainty, suggesting the timing of further rate hikes will depend largely on the fallout from potentially higher US tariffs.
The yields, which move inversely to prices, also rose due to a lack of demand at the end of Japan’s fiscal year in March, strategists said.
JGB yields march higher with focus on 30-yr bond auction
“Those yields could have fallen today because Washington’s announcement to impose a 25% tariff on automobile imports could hurt the economy, which will make it difficult for the BOJ to raise rates,” said Katsutoshi Inadome, senior strategist at Sumitomo Mitsui Trust Asset Management.
After its policy meeting last week, the BOJ listed the impact of trade policies as a potential risk for the outlook. US President Donald Trump on Wednesday unveiled a 25% tariff on imported vehicles, expanding a global trade war and prompting criticism and threats of retaliation from affected trading partners.
The 40-year JGB yield slipped 6.5 bps to 2.87% after a better-than-expected auction outcome.
The auction happened after the yield hit 3% for the first time, making them look cheap, Inadome said.
The 30-year JGB yield fell 2 bps to 2.58%.
The 20-year JGB yield dropped to as low as 2.315% but was last flat at 2.29%.
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