Japanese Bonds Plunge as Inflation Fears and Rate Hikes Bite

Japanese government bonds (JGBs) fell on Monday as inflation concerns and expectations of further central bank tightening drove selling. The benchmark 10-year JGB yield climbed 2 basis points to 3.095%, its highest close since August 1996.

The 2-year yield, which is most sensitive to the Bank of Japan's policy rates, advanced 1.5 basis points to 1.950%, matching a 31-year peak seen last week.

A key gauge of Japan's service-sector inflation rose in August at its fastest annual pace in more than two years, highlighting price pressures that may justify more interest rate increases.