Japanese Government Bonds Plummet on Inflation Concerns and BOJ Rate-Hike Bets

Japanese government bonds (JGBs) plummeted on Monday as investors reacted to signs of inflation and expectations for further central bank tightening. The benchmark 10-year JGB yield jumped by 2 basis points to 3.095%, its highest close since August 1996.

The 2-year yield, the one most sensitive to Bank of Japan policy rates, surged 1.5 bps 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 over two years, highlighting price pressures that may justify more interest rate increases.