JGB yeilds rises: Japanese government bond yields rose on Monday as a weak yen stoked expectations for tighter Bank of Japan policy, while concerns over elections in France and the US pushed yields higher globally.
The 10-year JGB yield rose 2.5 basis points to 1.065 per cent as of 0438 GMT, ticking back towards an almost 13-year peak of 1.1 per cent from late May.
Benchmark 10-year JGB futures 2JGBv1 fell 0.25 yen to 142.61, a nearly 11-year trough.
The 10-year yield rose more than other tenors, with an auction of the notes due on Tuesday. Demand is in question due to uncertainties over the BOJ’s plans for quantitative tightening, which won’t be announced until the July 30-31 policy meeting.
Meanwhile, expectations for a rate hike at the same gathering have been heightened by the yen’s slump to a 37 1/2-year low to the dollar on Friday.
In the current environment, “it’s easy for the yen bond market to test the topside for yields,” said Noriatsu Tanji, chief bond strategist at Mizuho Securities. “There is a good chance that the 10-year yield will rise above 1.1 per cent in the short term.”
US 10-year Treasury yields climbed to a fresh 2-1/2-week top in Tokyo hours as concerns built over the fiscal consequences of a potential second Donald Trump presidency, following President Joe Biden‘s shaky debate performance last week.
French bond yields FR10YT=RR have also been rising on worries that an election win for the far-right National Rally could add to the country’s debt pile, although results from first-round voting on the weekend showed the party winning fewer votes than some polls had predicted.
Japan’s two-year yield added 0.5 bp to 0.355 per cent, while the five-year yield rose 1.5 bps to 0.595 per cent.
The 20-year yield climbed 1.5 bps to 1.88 per cent. The 30-year yield was 1 bp higher at 2.24 per cent.
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