Short-term JGB yields jump to multi-decade highs on BOJ rate-hike bets
TLT•BOJ thinking and market commentary
- Three sources familiar with the BOJ's thinking said the central bank is set to raise interest rates as soon as September and is considering accelerating the pace of hikes thereafter.
- "Speculation about an early interest rate hike by the Bank of Japan continues to weigh on the market," Takayuki Miyajima, senior economist at Sony Financial Group, said in a note.
- Japan may signal the chance of faster-than-expected interest rate increases to stem the yen's decline, Tokyo's former top currency diplomat Mitsuhiro Furusawa told Reuters.
Yields hit multi-decade and record highs
- The two-year yield
JP2YTN=JBTC, the one most sensitive to BOJ policy rates, added 0.5 basis point (bp) to 1.650%, the highest since May 1995. Yields move inversely to bond prices. - The five-year yield
JP5YTN=JBTCadvanced 1.5 bps to a record high of 2.135%, extending its streak of gains to five sessions. The benchmark 10-year JGB yieldJP10YTN=JBTCclimbed 0.5 bp to 2.875%.
Inflation data and spillover from U.S. Treasuries
- Data on Thursday showed Japan's July producer price index rose 7.2% year-on-year, slightly below forecasts but still elevated enough to reinforce expectations for a rate hike.
- JGBs rose earlier in the session, tracking gains in U.S. Treasuries after tame producer price data cooled expectations for a Federal Reserve rate hike next month.
