BOJ Rate Hike Bets Spark Sharp Jump in Japanese Bond Yields

Japanese government bond yields rose sharply on Friday as the weak yen and rising oil prices fueled bets that the Bank of Japan would raise its interest rates earlier.

The two-year yield, most sensitive to BOJ's policy rates, rose 2 basis points to 1.51%, its highest level since May 1995.

The 30-year yield, which reflects inflation worries, rose to as high as 4%, its highest since July 9, and was last up 6.5 bps at 3.980%.

Rinto Maruyama, senior strategist for FX and Rates at SMBC Nikko Securities, noted that market expectations for the October rate hike might be too high.