TOKYO – Japan’s 10-year government bond yield jumped to a three-decade high on Aug 17, tracking a slide in global debt as inflation pressures mounted and expectations around central bank interest rate hikes solidified.
The benchmark 10-year Japanese government bond (JGB) yield climbed five basis points to 2.925 per cent, a level last seen in September 1996.
The yield has risen for six consecutive sessions, marking the longest winning run in more than a year. Yields move inversely to bond prices.
US Treasuries fell on Aug 14 after an initial rally driven by weaker-than-expected retail sales data faded, while persistent Middle East tensions kept investors on edge with crude prices turning higher. Euro zone yields also ended higher last week.
“At present, a bearish outlook on government bonds is spreading globally, and the upward trend in yields is intensifying, which is a cause for concern,” Keisuke Tsuruta, a senior bond strategist at Mitsubishi UFJ Morgan Stanley Securities, said in a note.
“On the domestic front, uncertainty surrounding the Bank of Japan’s pace of interest rate hikes and its terminal rate remains a key concern.”
The two-year yield, the one most sensitive to Bank of Japan policy rates, added 3.5 basis points to 1.685 per cent, the highest since May 1995. The five-year yield rose two basis points to 2.155 per cent, set for a record close.
The yield on the 30-year JGB advanced five basis points to 4.06 per cent, set for its highest close since July 7. The yield on the 40-year JGB, Japan’s longest tenor, increased four basis points to 4.115 per cent, poised for its highest close since May 25.
Data released on Aug 17 showed the Japanese economy expanded at an annualised 1.1 per cent in the April-June quarter, versus a median forecast of 2.0 per cent annualised growth.
Private consumption was flat and capital spending fell 1.2 per cent in the quarter. Reuters
