The rise in long-term interest rates accelerated in the domestic bond market, with the newly issued 10-year JGB yield briefly reaching 3.115% on the morning of 25 September, its highest level in about 30 years. The yield rose further from the 3.075% closing level on 24 September, as expectations of further rate increases and uncertainty over the Bank of Japan’s next moves spread through the market.
The rise in long-term interest rates accelerated further in the domestic bond market, with the benchmark newly issued 10-year JGB yield briefly reaching 3.115% on the morning of 25 September, its highest level in about 30 years. The previous day’s closing yield was 3.075%, pushing the level higher again in a single day.
The backdrop is a chain reaction of rising interest rates around the world. With crude oil prices remaining elevated, long-term interest rates in the US reached a 19-year high at one point. US economic data released on 23 September exceeded market expectations, strengthening expectations of further Federal Reserve rate hikes and driving Treasury selling and higher yields. This spilled over into Japanese government bonds.
As a domestic factor, the Bank of Japan decided to raise rates at its 17-18 monetary policy meeting, although some Policy Board members opposed the decision. As a result, doubts spread through the market over the BOJ’s future rate decisions, creating a dynamic in which expectations of further rate increases prompted JGB selling.
Movements in long-term interest rates could affect mortgage rates and companies’ funding costs. There are concerns that the impact could extend beyond households to corporate activity, drawing attention to developments ahead.