TOKYO: Japanese government bond (JGB) yields rose on Monday, tracking US Treasury yields higher as investors weighed the chance that the Bank of Japan (BOJ) could exit from negative interest rates as early as January.

The 10-year JGB yield was last at 0.5 basis point (bp) higher at 0.775%, after hitting Friday’s near one-month high of 0.800% earlier in the session.

JGB yields mirrored a rise in US Treasury yields on Friday, after data showed that employers added more jobs than expected in November.

Growing expectations that the BOJ would soon end negative interest rate policy were also at play, said Takeshi Ishida, a strategist at Resona Holdings.

Both JGB yields and the yen jumped on Thursday after expectations ramped up following comments by BOJ Governor Kazuo Ueda that the central bank will face an “even more challenging” situation in the year-end and next year.

The 20-year JGB yield ticked up as high as 1.575% before settling flat at 1.540%.

The 30-year JGB yield was last up 0.5 bp at 1.755% after rising to around a one-month high of 1.780%.

JGB yields rise from multi-month lows after weak 30-year bond auction

The BOJ will hold its monetary policy meeting on Dec. 18-19, where it’s possible the central bank could change the phrasing of its forward guidance in order to set the stage for normalising rates in January, said Ishida.

Recent weakness in consumption has become a fresh source of concern for policymakers, although it doesn’t necessarily mean the bank will be forced to keep interest rates negative, he said.

Lifting interest rates from negative territory to zero “is a move to raise rates, but it’s not a tightening of monetary policy at all”, Ishida added.

The two-year JGB yield edged down 0.5 bp to 0.085%.

The five-year yield rose as high as 0.370% before falling flat.