TOKYO: Longer-dated Japanese government bond yields ticked up for a second straight session on Monday as a rise in local inflation emboldened investors to bet on a policy shift at the Bank of Japan.

The 20-year JGB yield rose 0.5 basis point (bps) to 1.095% as of 0530 GMT, while the 30-year yield rose by the same margin to 1.485%.

On Friday as of this time, the 20- and 30-year yields were up 3 bps each after Tokyo’s core consumer price index (CPI) gained 3.6% from a year earlier in the first part of this month, putting pressure on the BOJ, which has been an outlier among global central banks by sticking with monetary stimulus.

The 10-year JGB yield rose half a basis point that day to 0.25%, reaching the upper limit of the BOJ’s policy band for the first time since Nov. 8.

The cash bond was untraded so far on Monday. “Foreign investors especially may be taking bets that the BOJ will find it necessary to change monetary policy within 3-6 months,” said Masayuki Kichikawa, chief macro strategist at Sumitomo Mitsui Asset Management.

“In our main scenario, we don’t think the BOJ will be forced to change monetary policy significantly, but at least in the coming one or two months, investors might continue to bet on that.”

JGB yields fall after Fed minutes signal slower rate hike pace

The rise in yields on Monday did not have the momentum seen on Friday and liquidity was thin.

Market participants said investors may have stayed on the sidelines ahead of several important US data points this week that could influence the Federal Reserve’s policy path, starting with inflation and jobs data and culminating with the monthly non-farm payrolls report on Friday.

The two-year and five-year notes were untraded, and last yielded -0.025% and 0.095%, respectively.

Benchmark 10-year JGB futures, which initially fell, were last up 0.07 yen at 149.04 in low-volume trade.