Japan 2-Year Yields Soar Amid Rate Hike Speculation
The two-year Japanese government bond yield reached its highest level in 31 years on Monday amid speculation of central bank rate hikes and uncertain debt auctions later this week.
The yield, which is most sensitive to Bank of Japan policy rates, rose by 0.5 basis points to 1.730%, a level not seen since April 1995. The benchmark 10-year JGB yield also climbed by 1 basis point to 2.935%.
Analysts believe that if the US Federal Reserve tightens monetary policy further, it will make the environment for Japan's central bank and the JGB market increasingly challenging. Investor demand may not materialize for this week's bond auctions.
Data released on Friday showed a rise in Tokyo's consumer price index in August, supporting the case for a BOJ interest rate hike next month.