Japan bond yields diverge as investors weigh inflation, BOJ outlook
TLT•Japanese government bond yields moved in opposite directions as investors assessed inflation and the Bank of Japan’s policy outlook. The 10-year yield held at 3.01%, while the 2-year yield rose to 1.915% and the 30-year yield fell to 4.045%.
1. Yields move apart
Shorter-term Japanese government bond yields edged higher on Tuesday, while long-term yields declined. The 2-year yield rose 1 basis point to 1.915%, and the 5-year yield climbed 1.5 basis points to 2.350%; the 30-year yield slipped 1 basis point to 4.045%, its fourth consecutive session of declines. The 10-year yield was unchanged at 3.01%.
2. Inflation and policy outlook
Japan’s wholesale prices rose 6.8% year on year in September, slowing from 7.6% in August and below forecasts. Import prices surged 24.5% as the yen weakened. Market participants continued to monitor the BOJ after its September rate hike; expectations leaned toward another 25-basis-point hike by year-end. Bond strategist Keisuke Tsuruta said recent declines in long and super-long yields were a rebound from earlier moves and that it was uncertain whether the trend would last.
