TOKYO: Japanese government bond yields retreated from a more than a decade year high on Friday after comments from the central bank governor eased worries about the rake hike path.
On the day, Bank of Japan (BOJ) Governor Kazuo Ueda said the central bank is ready to increase government bond buying if long-term interest rates rise sharply.
The 10-year JGB yield hit 1.455%, its highest level since November 2009, but fell to 1.42%, down 2 basis points (bps) from the previous session.
Rising inflation has driven expectations that the BOJ will keep raising its policy rates higher and faster, pushing up yields on Japanese government bonds (JGBs).
“What Ueda said today was the central bank’s basic stance, but it was issued when the yields were rising,” said Takahiro Otsuka, senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities.
“It created a perfect timing to buy back bonds,” Otsuka said. Ueda’s comments came also after data showed Japan’s core consumer inflation, a key gauge for policy, hit 3.2% in January, its fastest pace in 19 months.
The two-year JGB yield rose to 0.83%, its highest since October 2008, before trading at 0.81%, down 1 bp from the previous session.
JGB yields hit fresh multi-year highs as rising wages drive BOJ’s rate hike bets
The five-year yield hit 1.095%, its highest since October 2008 and was last at 1.055%, down 2.5 bps from Thursday.
The declines were limited as the market sees that the BOJ’s position on raising interest rates has not changed, said Otsuka.
The 20-year JGB yield was flat at 2.050%. The 30-year JGB yield rose 2 bps to 2.345%.
The 40-year JGB yield rose 2 bps to 2.635%.