Long-term JGB yields rise toward multi-decade highs as inflation signs mount

Japanese government bond yields rose on Friday, with long-term yields hitting multi-decade highs, as persistent inflation signals and global debt market volatility drove upward momentum.

Here are a few details:

• The benchmark 10-year JGB yield fell in early trading before reversing course. It climbed 0.5 basis point to 3.100 percent, close to the 30-year high of 3.115 percent touched last week. Yields move inversely to bond prices.
• Global bond markets remained volatile, with US Treasury yields jumping to multi-decade highs this week, driven by inflation worries tied to the Middle East conflict and expectations of further rate hikes by central banks.
• Annual core inflation in Tokyo accelerated in September at the fastest pace in 10 months, data showed on Friday, highlighting mounting price pressures that bolster the case for further rate hikes.
• Investors continued to weigh the Bank of Japan’s shift to a more preemptive tightening stance after last month’s hike to 1.25 percent. Market pricing now points to the next hike likely coming in December rather than October.
• “With upside risks to inflation persisting due to high crude oil prices and rising food costs, market expectations that the Bank of Japan will accelerate the pace of rate hikes have not completely faded,” Takayuki Miyajima, senior economist at Sony Financial Group, said in a note.
• The yield on the 20-year JGB advanced 1.5 bps to 3.955 percent, near a 30-year intraday peak touched on Thursday. The 30-year yield increased 4 bps to 4.21 percent, on track for a record high close.
• The yield on the 40-year JGB, Japan’s longest tenor, gained 5.5 bps to 4.275 percent, on track for its highest close since May.
• Shorter-term yields fell, steepening the yield curve. The 2-year yield, the one most sensitive to BOJ policy rates, eased 1.5 bps to 1.920 percent, while the 5-year yield slid 1.5 bps to 2.365 percent.

Reuters

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