TOKYO: Japanese government bond yields rose slightly from one-month lows on Monday, as traders awaited a speech by Bank of Japan Governor Kazuo Ueda later in the week for clues on the pace of monetary tightening.
The five-year JGB yield rose 1 basis point (bp) to 0.710% as of 0548 GMT, after falling to as low as 0.68% on Friday.
The two-year yield was flat at 0.57%, after dipping to 0.555% in the previous session for the first time since Nov. 20.
Yields have been largely in retreat since BOJ Governor Ueda on Thursday sent a more dovish message than investors had expected, saying it would still take considerable time to assess the trend for domestic wages and global economic growth.
However, a sharp depreciation in the yen since then has put the market on alert for a more hawkish shift in Ueda’s speech on Wednesday, said Masayuki Kichikawa, chief macro strategist at Sumitomo Mitsui DS Asset Management.
Kichikawa expects a rate hike in either January or March, with policymakers waiting another six months from then to raise rates again, eventually reaching at least 1% for the benchmark rate.
That would mean 10-year JGB yields gradually rise to around 1.3-1.5%, he said.
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In the current session, the 10-year yield added 0.5 bp to 1.055%.
Benchmark 10-year JGB futures fell 0.08 yen to 142.39. Prices and yields move inversely.
On the super-long end, the 20-year JGB yield rose 1.5 bps to 1.860%, while the 30-year JGB yield added 0.5 bp to 2.255%.
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