Japan's Bond Yields Soar After Coordinated Intervention with US

Japan's short-end bond yields surged on Monday after investors increased bets on an early interest rate hike from the Bank of Japan (BOJ) following a coordinated yen-buying intervention with the US.

The five-year yield rose to a record 2.050%, while the two-year yield, which is most sensitive to BOJ policy, reached its highest since May 1995 at 1.54%.

Rinto Maruyama, senior strategist of FX and rates at SMBC Nikko Securities, attributed the increase in rate-hike bets to Japan's pressure to support the yen with fundamentals, such as monetary policy.

The BOJ on Friday kept its policy rate steady but warned for the first time that underlying inflation could exceed its target, shifting focus to upside price risks.