Japan bond yields rise to 2008 high on rate hike bets as 10-year auction looms

Japanese 10-year government bond yields climbed to the highest level in 17 years on Tuesday amid growing speculation that the Bank of Japan could raise interest rates as soon as this month.

An auction of around 2.6 trillion yen ($16.7 billion) of the securities later in the day also has the potential to inject additional volatility into the market.

The 10-year JGB yield added 0.5 basis point to 1.88%, the highest since June 2008.


The two-year yield, which is the most sensitive to monetary policy expectations, was flat at 1.02%, and the five-year yield was steady at 1.38%. Both remain at the June 2008 peaks reached on Monday.

Other tenors had yet to trade.

BOJ Governor Kazuo Ueda said in a speech on Monday in Nagoya that policymakers will consider the "pros and cons" of a December hike, giving the strongest signal yet of near-term policy tightening. ($1 = 155.5100 yen).