Japan's 10-year bond yield hits 3-decade high as inflation, BOJ pressures mount
TLT•Economy expands less than expected
- Data released on Monday showed the Japanese economy expanded at an annualised 1.1% in the April-June quarter, versus a median forecast of 2.0% annualised growth. Private consumption was flat and capital spending fell 1.2% in the quarter.
Shorter and longer maturities also rise
- The two-year yield JP2YTN=JBTC, the one most sensitive to Bank of Japan policy rates, added 3.5 bps to 1.685%, the highest since May 1995. The five-year yield JP5YTN=JBTC rose 2 bps to 2.155%, set for a record close.
- The yield on the 30-year JGB JP30YTN=JBTC advanced 5 bps to 4.06%, set for its highest close since July 7. The yield on the 40-year JGB JP40YTN=JBTC, Japan's longest tenor, increased 4 bps to 4.115%, poised for its highest close since May 25.
10-year JGB yield hits three-decade high
Japan's 10-year government bond yield jumped to a three-decade high on Monday, tracking a slide in global debt as inflation pressures mounted and expectations around central bank interest rate hikes solidified.
Here are a few details:
- The benchmark 10-year JGB yield JP10YTN=JBTC climbed 5 basis points to 2.925%, a level last seen in September 1996. The yield has risen for six consecutive sessions, marking the longest winning run in more than a year. Yields move inversely to bond prices.
- U.S. Treasuries fell on Friday after an initial rally driven by weaker-than-expected retail sales data faded, while persistent Middle East tensions kept investors on edge with crude prices turning higher. Euro zone yields also ended higher last week.
- "At present, a bearish outlook on government bonds is spreading globally, and the upward trend in yields is intensifying, which is a cause for concern," Keisuke Tsuruta, a senior bond strategist at Mitsubishi UFJ Morgan Stanley Securities, said in a note.
