Japan bond yields rise as haven demand recedes, BOJ meeting looms
TLT•Japanese government bond yields rose, with the 10-year yield up 2 basis points to 2.805%, as a rebound in AI-related shares reduced haven demand and investors positioned ahead of the Bank of Japan meeting.
1. Yields climb ahead of BOJ
The 10-year Japanese government bond yield rose for a second straight session, climbing 2 basis points to 2.805%. The 20-year yield advanced 4 basis points to 3.635%, and the 30-year yield gained 5.5 basis points to 3.875%.
2. Policy and inflation outlook
The Bank of Japan is due to meet on October 29-30 and is widely expected to hold rates after raising them in September to a 31-year high of 1.25%. Markets expect a 25-basis-point hike to 1.5% in December. The BOJ’s trend inflation index rose 3.2% year over year in September, accelerating from 2.6% in August.
3. Budget uncertainty weighs
Keisuke Tsuruta, a senior bond strategist at Mitsubishi UFJ Morgan Stanley Securities, said uncertainty over next fiscal year’s budget and JGB issuance plan was likely to keep weighing on the market. Global bond markets have faced a selloff over the past month, driven by sticky inflation, higher energy prices and concerns about rising government borrowing.
