Japanese Bond Yields Surge to 30-Year High as BOJ Rate Hike Expectations Intensify

Japanese financial markets diverged on Monday, August 17, with the Nikkei 225 rising for a fifth consecutive session to close at 69,220.25, up 506.45 points or 0.74%, while the 10-year Japanese government bond yield climbed to its highest level in nearly 30 years.

The Nikkei's strong performance was led by AI and semiconductor stocks, but profit-taking selling emerged intermittently during the session.

In contrast, the bond market saw sustained selling pressure, with the 10-year JGB yield rising 5.5 basis points to 2.93%, its highest since September 1996.

Nearly an 80% probability of a Bank of Japan rate hike at its September 18 meeting is now priced in by traders, according to overnight index swaps.