TOKYO: Japanese government bond (JGB) yields rebounded on Friday, buoyed by a rise in their US peers and inflation data from Japan’s capital that continues to come in above the Bank of Japan’s 2% target.
The benchmark 10-year JGB yield climbed 2 basis points (bps) to 0.905% as of 0329 GMT, while the 10-year JGB futures fell 0.15 yen to 144.58 yen.
US Treasury yields rose on Thursday, after data indicated the world’s largest economy was on solid enough footing to give the Federal Reserve room to be less aggressive in cutting interest rates this year.
Meanwhile, core inflation in Japan’s capital accelerated for a fourth straight month in August, data showed on Friday, tracking comfortably above the central bank’s 2% target.
The latest figures keep alive expectations of more interest rate hikes ahead.
Views on whether further hikes will come within the year differ, however, with short-term financial markets expecting it unlikely while economists probably still see a strong chance, said Yoshiro Sato, an economist at Resona Holdings.
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While BOJ officials have emphasised there won’t be any rate increases while markets remain fragile, Governor Kazuo Ueda said the central bank would raise rates further if inflation remains on track to durably hit its 2% target in the coming years.
“With the inflation rate notably around 2% and wages rising to a degree that’s probably higher than what the BOJ expected, a rate hike within the year wouldn’t be strange,” said Sato.
Elsewhere on the curve, the 20-year JGB yield rose 1.5 bps to 1.72%, while the 30-year JGB yield ticked up 0.5 bp to 2.08%.
The two-year JGB yield was also up 0.5 bp at 0.37%. The five-year yield rose 1 bp to 0.505%.
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