Key 10-Year JGB Yield Briefly Hits 29-Year High of 2.81 Pct

Tokyo, July 3 (Jiji Press)–The yield on the most recent issue of 10-year Japanese government bonds briefly hit a 29-year high of 2.81 pct in Tokyo interdealer bond trading Friday morning. The key Japanese long-term interest rate rose to the highest level since May 1997, according to Japan Bond Trading Co. JGBs came under selling pressure on concerns over fiscal deterioration stemming from plans by Prime Minister Sanae Takaichi’s administration to promote public-private investment totaling 370 trillion yen by fiscal 2040 and reduce the consumption tax. JGBs were also hit by selling after the Takaichi administration said Tuesday in a draft of its Basic Policy on Economic and Fiscal Management and Reform that appropriate monetary policy management by the Bank of Japan is very important to achieve a strong economy. As some financial market participants took the draft as signaling caution over further interest rate hikes by the BOJ, concerns that the central bank may fall behind the curve also put upward pressure on long-term interest rates. “Unless the Takaichi administration changes its expansionary fiscal policy stance, bond selling will not stop, and the key 10-year JGB yield could reach 3 pct by autumn,” said Katsutoshi Inadome, senior strategist at Sumitomo Mitsui Trust Asset Management. END [Copyright The Jiji Press, Ltd.]