A screen on Monday, October 30, 2023 at the Nickelodeon 225 stock average of the Tokyo Stock Exchange (TSE), operated by the Japan Exchange Group (JPX), in Tokyo, Japan. Photographer: Akio Kon/Bloomberg via Getty Images
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Japan’s government bond yields surged on Thursday, with JGB’s 10-year yield being the highest since June 2009, and experts pointed out the pressure of global bond selling.
Since 2009, the 10-year JGB yield has risen by nearly 8 basis points, exceeding 1.5% for the first time, while the 30-year bond yield has also risen by 13 basis points, exceeding the first 2.5% since 2008.
Masahiko Loo, senior fixed income strategist at State Street Global Advisors, said the JGB sell-off was combined with upward pressure on global yields. The U.S. fiscal yield in 10 years rose by 5 basis points to 4.317%.
Nomura’s FX strategy director at Yujiro Goto in Japan told CNBC that supply and demand do not currently support the JGB market, while also pointing to a sharp rise in European government bond yields.
“Investors now expect the EU and German governments to increase fiscal spending, which increases upward pressure on global bond yields,” he said.
The comments added by Bank of Japan Deputy Governor Shinichi Uchida helped sell off. Uchida reportedly said central banks could “raise interest rates at a rate as dominant as financial markets and economists.”
Loo said that except for the end of March, investors such as Bank of Japan have limited appetite for risk by the end of March, except for the constant expectation of the Boj hiking cycle.
Last week, Uchida It is reported that Despite recent gains in yields, central banks will continue to gradually reduce their purchases of government bonds.
As central banks appealed to normalization of their hyperfloating monetary policy last year, it said it would Reduce JGB purchases Each calendar quarter is about 400 billion yen.
Japan’s 30-year Ministry of Finance
Asia FX chief Mitul Kotecha and Barclays’ rate strategy told CNBC’s “Asquawk Box Asia“On Thursday, the sell-off was partly due to the increase in inflation in Japan: “Many people say that real inflation is even higher than what the actual measures show. So, I think part of that is inflation moving, which drives higher returns. ”
Japan’s title inflation For 34 months, the 34-month figure has surpassed Boj’s 2% target, while the latest figure in January hit a two-year high of 4%.
The so-called “core” inflation rate lowered the prices of fresh food and energy and was closely monitored by BoJ, rising slightly to 2.5% in January, reaching its highest rate since March 2024.
Higher inflation raises Boj’s expectations for more rate hikes, thus increasing bond yields.
