TOKYO: Japanese government bond (JGB) yields rose on Tuesday, with the 10-year JGB yield hovering at a decade high, as US Treasury yields hit fresh peaks and investors continued to assess the possibility of near-term policy adjustments by the Bank of Japan (BOJ).
The benchmark 10-year US Treasury yield added to three straight weeks of gains overnight and touched a multi-year peak of 4.556% during Asian hours.
The 10-year JGB yield rose 2 basis points (bps) to 0.745%, its highest since September 2013, after falling as low as 0.725% the day before.
“JGB investors continue to maintain a cautious stance on bond purchases because they anticipate minor adjustments to be announced during the October BOJ meeting,” said Ryutaro Kimura, fixed income strategist at AXA Investment Managers.
The Bank of Japan kept its ultra-loose monetary policy on Friday, striking a dovish tone that was at odds with the Fed, which stiffened its hawkish stance at its policy meeting last week.
While BOJ Governor Kazuo Ueda’s focus on wage growth might have dampened expectations of an early exit from negative interest rates, the chance of smaller adjustments to policy or forward guidance remain “relatively high,” including in response to a weakening yen, Kimura said.
Ueda on Monday said there was “very high uncertainty” over whether companies would continue raising prices and wages.
The yen, meanwhile, hit 148.97 to the dollar on the same day and remained near the 11-month low. The two-year JGB yield was flat at 0.025%.
The five-year yield was up 1 bps at 0.3%.
The 20-year JGB yield sat 1.5 bps higher at 1.465%, while the 30-year JGB yield settled at 1.7% after rising as high as 1.705%.
The 40-year JGB yield fell 0.5 bps to 1.835% after a scheduled auction for the bond before last sitting flat.
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