Japan Bond Yields Hold Firm Amid Inflation Pressure
Japan's long-term government bond yields held firm on August 13, with the benchmark 10-year JGB yield trading at 2.855%, up 0.015 percentage points from the previous day. The rise in yields came as the Bank of Japan's July Corporate Goods Price Index showed a 7.2% year-on-year increase, putting inflation pressure front and center.
The index rose by 7.2% year-on-year, while the pace of increase slowed from June's 7.3% gain, the level remains elevated. The BOJ conducted its regular government bond purchase operation on August 13, but the results were viewed as 'weak,' weighing on the bond market.
The recent rise in yields has been most pronounced in the short- to medium-term segment, with the 2-year and 5-year JGB yields hitting their highest levels since 1995 and 2000, respectively. The 10-year yield at 2.855% has compressed the spread against the 5-year to roughly 75 basis points.