Japanese government bonds fell as inflation concerns and expectations for further Bank of Japan tightening drove yields higher. The 10-year yield rose 2 basis points to 3.095%, near its highest close since August 1996, while the 2-year yield reached 1.950%, matching a 31-year peak.
Japanese government bonds fell on Monday, pushing yields toward multi-decade highs as inflation concerns and expectations for further central bank tightening spurred selling. The 10-year yield climbed 2 basis points to 3.095%, poised for its highest close since August 1996; the 2-year yield rose 1.5 basis points to 1.950%, matching a 31-year peak. The 30-year yield added 1 basis point to 4.165%.
A key gauge of Japan’s service-sector inflation rose in August at its fastest annual pace in more than two years. Minutes from the Bank of Japan’s July policy meeting showed members saw a need to focus on inflation, with some calling for faster rate hikes. The central bank raised its key rate to 1.25% this month, a 31-year high.
Markets are looking ahead to auctions of 40-year and 2-year government bonds on Tuesday and Wednesday, respectively. The Ministry of Finance was also due to meet primary dealers, with attention focused on whether it would reduce issuance in liquidity-enhancement auctions for 5-to-11-year bonds and how any reductions might be offset.
