TOKYO: Japanese government bond (JGB) yields rose yesterday, tracking their US peers at the same time that a weakened yen ramps up expectations that the Bank of Japan (BoJ) will normalise its ultra-easy monetary policy in March.
The 10-year JGB yield was last up 2.5 basis points (bps) at 0.750%, and touched its highest since Dec 12 at 0.765% earlier in the session.
US Treasury yields, which Japanese yields tend to follow, climbed overnight after the domestic consumer price index (CPI) report surprised to the upside. The 10-year yield then hit a fresh two and a half-month high of 4.332% in the Asian morning.
“With US yields on the rise, this is an environment where it’s easy for JGB yields to go up,” said Resona Holdings’ strategist Takeshi Ishida.
At the same time, the US dollar has jumped, pushing the yen back to the psychologically significant range of 150 per US dollar for the first time since November.
With US yields on the rise again and the yen languishing, there’s a sense in the market that the BoJ will have to exit from negative interest rates in March, said Ishida. — Reuters