JGB yields rise across curve on BOJ hike bets, higher global yields

TOKYO: Japanese government bond (JGB) yields rose across the curve on Wednesday, supported by firmer Bank of Japan rate-hike expectations and a global backdrop of elevated yields. Here are a few details: The benchmark 10-year JGB yield climbed 6 basis points (bps) to 2. 625%. Yields move inversely to bond prices. Ryutaro Kimura, a senior fixed income strategist at BNP Paribas Asset Management, said Wednesday’s rise in the benchmark yield reflected selling into a rebound, after a stronger-than-expected auction of those maturities drove an 11-basis-point drop on Tuesday. “From a fundamentals perspective, it’s not as if the risk of higher interest rates had disappeared. But in terms of levels, we interpreted the move as having gone a bit too far in the short term, ” he said. US Treasury and euro zone yields have remained elevated in recent weeks on persistent inflation concerns and shifting expectations for major central banks. Markets are awaiting a speech by BOJ Governor Kazuo Ueda later on Wednesday for further policy clues after recent hawkish signals and inflationary risks tied to the Iran war-driven energy shock. Finance Minister Satsuki Katayama said on Wednesday that she is largely in alignment with Ueda on various aspects. The two-year yield, the one most sensitive to BOJ policy rates, advanced 3 bps to 1. 405%, while the five-year yield gained 5 bps to 1. 905%. Kimura of BNP Paribas Asset Management said the rise in yields on short-dated maturities reflected expectations for interest-rate hikes, or at least caution over potentially hawkish messaging. “That said, it is still unclear how far (Ueda) will go in making such remarks, ” he said. The yield on the 40-year JGB, Japan’s longest tenor, increased 2 bps to 3. 765%, while the 30-year yield added 1 bp to 3. 855%. The 20-year yield advanced 1 bp to 3. 51%. ‐Reuters

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