10-Year JGB Yield Surges above 2.7 Pct amid Fiscal Concern

Tokyo, May 15 (Jiji Press)–The benchmark yield on 10-year Japanese government bonds soared as high as 2.730 pct in Tokyo interdealer trading on Friday amid concerns about the country’s fiscal deterioration and inflation. The 10-year JGB yield hit its highest level since May 1997, according to Japan Bond Trading Co. JGBs came under selling pressure as the administration of Prime Minister Sanae Takaichi has reportedly begun considering a supplementary budget to finance energy subsidies. “Against a backdrop of market wariness over fiscal expansion and other factors, the long-term interest rate could reach 3 pct within this year,” said Katsutoshi Inadome, a senior strategist at Sumitomo Mitsui Trust Asset Management Co. The bond market was also weighed down by concerns about accelerating inflation, as the de facto blockade of the Strait of Hormuz in the Middle East is expected to persist. Japan’s producer price index jumped 4.9 pct from a year before in April, much faster than the 2.9 pct rise in March, the Bank of Japan said Friday. “There are growing expectations that the BOJ will continue to raise interest rates, out of concern that inflation could rise further,” Inadome said. END [Copyright The Jiji Press, Ltd.]