Views are spreading that Japan’s long-term interest rates could exceed 2.9% and reach 3%. The 10-year Japanese government bond yield temporarily rose to 2.945%, with developments in the U.S. and European government bond markets, high crude oil prices and expectations of a Bank of Japan rate hike cited as contributing factors.
The 10-year Japanese government bond yield temporarily rose to 2.945%, reaching its highest level since September 1996.
Since exceeding 2.930% on 9 July, views have been spreading that long-term interest rates could move above 2.9%, bringing 3% into view.
In the U.S. long-term bond market, the awarded yield at the 13 July auction of 30-year Treasuries reached 5.216%, its highest level in 25 years. European bond yields have also continued to rise, with the German 10-year bond yield at 3.22%, its highest level since May 2011.
In Japan, expectations of a Bank of Japan rate hike are also being closely watched. On 14 July, reports said that the Bank of Japan was considering an early rate hike to 1.25%.
Among domestic price indicators, the July corporate goods price index was reported to have risen 7.2% year on year, while the July national CPI rose 1.6%. The relationship between price trends and interest rates is attracting attention.
Overall, long-term interest rates are being viewed as having passed 2.9% as an interim milestone, and some observers believe that 3% is now in view. At the same time, the precise level of the terminal rate remains uncertain.