Japan’s 2-year government bond yield moved close to the 2% mark on Sept. 28 as investors stepped up bets that the Bank of Japan may raise rates further. The yield, which is highly sensitive to monetary policy expectations, briefly climbed 4 basis points to 1.975% on Monday, its highest level since 1995. Pressure was visible across other maturities as well, with the 5-year Japanese government bond yield rising 3 basis points to 2.43%.
In a report, strategists including Nakamu Okumura at SMBC Nikko Securities said trades tied to faster policy tightening by the BOJ were gaining traction as political figures in Japan and overseas paid closer attention to the weak yen. They added that fiscal expansion in major economies and higher commodity prices could strengthen market expectations that Japan will ultimately need tighter monetary policy to curb inflation.
Japan’s 2-year government bond yield moved close to the 2% threshold on Sept. 28 as investors increased bets on further rate hikes from the Bank of Japan.
The 2-year Japanese government bond yield, which is especially sensitive to monetary policy expectations, briefly rose 4 basis points to 1.975% on Monday, the highest level since 1995.
Pressure extended to other parts of the curve. The 5-year Japanese government bond yield rose 3 basis points to 2.43%.
In a report, strategists including Nakamu Okumura at SMBC Nikko Securities wrote that trades betting on faster policy tightening by the BOJ were gradually gaining momentum as political figures in Japan and abroad paid closer attention to yen weakness.
They said fiscal expansion in major economies and rising commodity prices could also reinforce market expectations that Japan will eventually need to tighten monetary policy to curb inflation.
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