The yield on the newly issued 10-year Japanese government bond, the benchmark for long-term interest rates in the Tokyo bond market, briefly reached 3.000%, its highest level in about 30 years. Expectations of early rate hikes in Japan and the US, along with rising oil prices, are behind the move.
In the Tokyo bond market on the 1st, the yield on the newly issued 10-year Japanese government bond, the benchmark for long-term interest rates, briefly reached 3.000%, its highest level in about 30 years. The market is closely watching US interest rate trends in relation to inflation and growth.
The move reflects views that, in addition to growing expectations of early rate hikes in Japan and the US, rising oil prices amid concerns over the situation in the Middle East are pushing up long-term interest rates. Japanese market participants are wary of the impact of US interest rate trends and yen depreciation.
Long-term interest rates have continued to rise since the Takaichi administration took office, with increased government bond issuance under expansionary fiscal policy and inflationary pressure cited as areas of concern. Market participants are seeking to assess developments in the fiscal and inflationary environment.
There is a view that Robert Warsh, chair of the US Federal Reserve Board, indicated the need for a rate hike amid persistently high inflation, heightening concern over US interest rate trends. The Bank of Japan's Monetary Policy Meeting is scheduled for 17-18 September, as expectations of a rate hike are building.