Oil Price Surge and Hawkish BOJ Comments Lift Japanese Bond Yields
Japanese government bond yields rose on Thursday as oil prices surged above $100 a barrel following escalating tensions in the Middle East.
The benchmark 10-year JGB yield climbed 5 basis points to 2.93%, while the two-year yield, which is sensitive to monetary policy expectations, rose 1.5 basis points to 1.845%.
BOJ board member Kazuyuki Masu said the central bank could be forced to raise interest rates rapidly if inflation accelerates, given Japan's still-accommodative financial conditions.
This hawkish comment from Masu strengthened expectations of further monetary policy tightening at the BOJ's upcoming policy meeting next Friday.
Mizuho Securities senior market economist Yusuke Matsuo expects Governor Kazuo Ueda to maintain a hawkish stance, but also warned that the central bank's communication could be interpreted as less hawkish than markets anticipate.