TOKYO: Japan’s 10-year government bond yield hit near a one-month high as optimism on global trade talks lifted appetite for risk-friendly assets, and prompted investors to sell safe-haven bonds.
The 10-year yield rose to 1.365%, its highest since April 15, and was last up 4 basis points (bps) at 1.36%.
US Treasury yields touched multi-week highs overnight, as a trade deal between the United States and Britain spurred optimism that similar agreements will be struck with other countries in the coming weeks and months.
Financial markets are now awaiting the outcome of preliminary US-China trade talks due to begin on Saturday in Switzerland.
“The fate of those talks is still uncertain, but if there are more agreements between the US and other nations, the Bank of Japan may alter its outlook for the economy,” said Naoya Hasegawa, chief bond strategist at Okasan Securities.
JGB yields with super-long maturities jump ahead of auction
“And that could revive the expectations for the BOJ’s rate hikes,” he said. Earlier this month, the BOJ kept interest rates steady and sharply cut its growth forecasts, signalling uncertainty surrounding US President Donald Trump’s sweeping tariffs could delay the central bank’s rate hike cycle.
Japan’s Nikkei rose to a more than one-month high on Friday, while the Topix index was set for its longest winning streak in more than six years.
Yields on Japanese government bonds rose across the curve.
The two-year yield 1.5 bps to 0.63% and the five-year yield rose 2 bps to 0.880%.
The 20-year JGB yield rose 4 bps to 2.34%.
The 30-year yield rose 2 bps to 2.895%, its highest since August 2004.
The 40-year yield rose 2.5 bps to 3.355%.
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