Japan bond yields rise after plunge on AI uncertainty
TLT•Japan’s 10-year government bond yield rose 6.5 basis points to 2.7% on Monday, trimming last week’s decline as investors weighed AI-related uncertainty and higher U.S. Treasury yields.
1. Yields rebound
Japan’s government bond yields rose on Monday, trimming last week’s plunge as a selloff in AI-related shares had spurred demand for haven assets. The benchmark 10-year yield climbed 6.5 basis points to 2.7%, while the five-year yield advanced 5.5 basis points to 2.1%; the two-year yield held steady at 1.725%.
2. Policy and risk outlook
U.S. Treasuries fell in the latest session after a payrolls report boosted expectations that the Federal Reserve will raise rates at its December meeting. Keisuke Tsuruta, a senior bond strategist at Mitsubishi UFJ Morgan Stanley Securities, wrote that uncertainty over AI-related investment remained strong, while the speed of last week’s yield decline also left room for a near-term correction.
3. Bank of Japan outlook
The Bank of Japan has held its policy rate at 1.25% since a September hike but has taken a more hawkish tone, with rate expectations firming toward a December increase to 1.5%. Governor Kazuo Ueda said the central bank expects underlying inflation to stay around its 2% target but recognizes some upside risks.
