Key 10-Year JGB Yield Hits 30-Year High of 2.93 Pct

Tokyo, Aug. 17 (Jiji Press)–The yield on the most recent 10-year Japanese government bond issue, a key long-term interest rate, rose to a 30-year high of 2.93 pct temporarily in Tokyo interdealer trading Monday. The rise in the benchmark yield reflected increasing expectations for an early interest rate hike by the Bank of Japan. According to Japan Bond Trading Co., a benchmark 10-year JGB yield reached such a high level for the first time since October 1996. The yield on the 383rd 10-year JGB issue later stood at 2.92 pct, still up from late Friday’s 2.875 pct. Market players have increasingly come to expect that the country’s inflation will continue intensifying owing to expanding demand related to artificial intelligence and the yen’s depreciation. Against this background, many forecast that the BOJ will raise interest rates as early as September and accelerate the pace of interest rate hikes, which led to JGB selling and rises in bond yields with various maturities, market sources said. The yield on the newest five-year note issue climbed to a record high of 2.17 pct temporarily. Speculation is spreading that Prime Minister Sanae Takaichi’s administration will tolerate a BOJ rate hike after U.S. Treasury Secretary Scott Bessent on Aug. 4 expressed confidence that BOJ Governor Kazuo Ueda would do “what is needed.” In addition, concerns persist regarding Japanese fiscal deterioration after the government’s decision to cut the consumption tax on food. Rising trends for crude oil prices and U.S. interest rates stemming from uncertainties in the Middle East situation also contributed to JGB selling. “The yield on the most recent 10-year JGB issue may reach 3 pct as early as this week,” a Japanese securities house official said. END [Copyright The Jiji Press, Ltd.]