JGB yields rise across curve on BOJ hike bets, higher global yields
- The benchmark 10-year JGB yield climbed 6 basis points (bps) to 2.625%. Yields move inversely to bond prices
TOKYO: Japanese government bond (JGB) yields rose across the curve on Wednesday, supported by firmer Bank of Japan rate-hike expectations and a global backdrop of elevated yields.
Here are a few details:
The benchmark 10-year JGB yield climbed 6 basis points (bps) to 2.625%. Yields move inversely to bond prices.
Ryutaro Kimura, a senior fixed income strategist at BNP Paribas Asset Management, said Wednesday’s rise in the benchmark yield reflected selling into a rebound, after a stronger-than-expected auction of those maturities drove an 11-basis-point drop on Tuesday.
“From a fundamentals perspective, it’s not as if the risk of higher interest rates had disappeared. But in terms of levels, we interpreted the move as having gone a bit too far in the short term,” he said.
US Treasury and euro zone yields have remained elevated in recent weeks on persistent inflation concerns and shifting expectations for major central banks. Markets are awaiting a speech by BOJ Governor Kazuo Ueda later on Wednesday for further policy clues after recent hawkish signals and inflationary risks tied to the Iran war-driven energy shock.
Finance Minister Satsuki Katayama said on Wednesday that she is largely in alignment with Ueda on various aspects.
The two-year yield, the one most sensitive to BOJ policy rates, advanced 3 bps to 1.405%, while the five-year yield gained 5 bps to 1.905%.
Kimura of BNP Paribas Asset Management said the rise in yields on short-dated maturities reflected expectations for interest-rate hikes, or at least caution over potentially hawkish messaging.
“That said, it is still unclear how far (Ueda) will go in making such remarks,” he said.
The yield on the 40-year JGB, Japan’s longest tenor, increased 2 bps to 3.765%, while the 30-year yield added 1 bp to 3.855%.
The 20-year yield advanced 1 bp to 3.51%. ‑Reuters
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