Japan bond yields on track for weekly rise as BOJ decision looms
TLT•The 10-year Japanese government bond yield was flat at 2.835% on Friday but poised for an 8-basis-point weekly rise. The Bank of Japan was expected to keep its policy rate at 1.25%.
1. Yields poised to rise
The benchmark 10-year Japanese government bond yield held at 2.835% on Friday, putting it on track for an 8-basis-point rise for the week as investors awaited the Bank of Japan’s policy decision. The central bank was expected to hold its policy rate at 1.25% after its two-day meeting.
2. Inflation and market factors
People familiar with the matter said the BOJ was likely to slightly raise its inflation forecast and signal that underlying inflation had roughly reached its 2% target, implying scope for another rate hike as soon as December. Tokyo core consumer prices rose 2.6% year over year in October, down from 2.7% in September, while September factory output increased 2.2% month over month.
3. Other yields and trading
The 20-year yield was steady at 3.670%, the 30-year at 3.895%, and the 40-year at 4.040%. The two-year yield held at 1.905% and the five-year at 2.270%; a strong two-year bond auction on Thursday supported the market.
