Japanese bond yields hit multi-week highs as US Treasury sell-off weighs

Japanese government bond (JGB) yields climbed to multi-week highs on Friday, tracking an overnight rise in US Treasury yields as investors assessed the implications of the US-Iran conflict and the outlook for Federal Reserve monetary policy, as per a report by Reuters.

The benchmark 10-year JGB yield rose 7 basis points to 2.860%, its highest level since October 22. The five-year yield advanced 5.5 basis points to 2.25%, after touching 2.265%, its highest since October 29.

Bond yields move inversely to prices, indicating increased selling pressure in the Japanese debt market.


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According to Reuters, US Treasury yields climbed overnight after US President Donald Trump said Washington did not need a deal with Iran. Investors also weighed the possibility of a larger-than-usual Federal Reserve interest rate hike next month, adding to pressure on government bonds.

Currency movements further reflected shifting interest-rate expectations. The Japanese yen briefly touched the psychologically important 160-per-dollar level overnight as traders focused on widening interest-rate differentials between the United States and Japan amid growing expectations of further Fed rate increases.

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Expectations of higher interest rates are also weighing on Japanese bonds. Hiroshi Watanabe, chief economist at Sony Financial Group, said expectations of a rate hike were likely to strengthen, leaving bonds more vulnerable to selling pressure.

Other maturities had yet to record trades as of 0029 GMT on Friday, according to Reuters.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)