TOKYO: Japan’s 10-year government bond (JGB) yield hit a three-month high on Tuesday, as market players bet the Bank of Japan (BOJ) would end its negative rate policy as early as this month.

The 10-year JGB yield rose to 0.775%, its highest since Dec. 11, before easing to 0.77%, up 1 basis point (bp) from the previous session.

“The market has already priced in the end of the BOJ’s policy tweak,” said Keisuke Tsuruta, senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities.

“The yields may move depending on what is going to be announced at the BOJ’s policy meeting. There are still some uncertainties about the outcome.”

A growing number of BOJ policymakers are warming to the idea of ending negative interest rates this month and the central bank will likely overhaul its massive stimulus programme that consists of a bond yield control and purchases of riskier assets, Reuters reported last week.

Japan’s 2-year bond yield hits 13-year high on rising bets on BOJ policy shift

The market eyes on the outcome of an auction for five-year bonds later in the day.

The yield on the five-year bond rose to 0.4% in the previous session, its highest since Nov. 14. It was last down 0.5 bp at 0.370%.

“The auction will become a gauge for the demand for the note with this duration at this yield level,” said Tsuruta.

The two-year JGB yield was flat at 0.195%. The 20-year JGB yield was flat at 1.54% and the 30-year JGB yield rose 0.5 bp to 1.820%.