Japan bond yields head for historic fifth straight quarterly surge
TLT•Japan’s 10-year government bond yield was on track to rise 42 basis points in the quarter, marking a fifth consecutive quarter of double-digit gains, although it fell 0.5 basis point to 3.08% on Wednesday.
1. Quarterly yield gains
Japan’s 10-year government bond yield was set to rise 42 basis points in the three months to the end of September, an unprecedented fifth consecutive quarter of double-digit gains since 1992. The yield fell 0.5 basis point to 3.08% in the latest session.
2. Rate hike expectations
Mid-term yields rose more sharply than longer-term yields as bets grew that the Bank of Japan could raise rates as early as October. Swap rates implied a 23% chance of a hike to 1.5% that month, down from 36% in the previous session. A modestly firm two-year bond auction helped ease pressure on the two-year yield, which fell 2 basis points to 1.94%.
