In the government bond market at the start of the week, the yield on the newly issued 10-year government bond, a benchmark for long-term interest rates, temporarily reached 2.930%, rising to its highest level in approximately 29 years and 10 months since October 1996. The move was attributed to expectations of a Bank of Japan rate hike and the rise in long-term U.S. Treasury yields.
In the government bond market on Monday the 17th, the yield on the newly issued 10-year government bond, a benchmark for long-term interest rates, temporarily reached 2.930%. This was its highest level in approximately 29 years and 10 months since October 1996, up 0.055 percentage points from the previous Friday.
The rise in yields was attributed to growing expectations that the Bank of Japan would move to raise interest rates soon, as well as the spillover from the rise in long-term U.S. Treasury yields. The yield approached the key 3% level.
Although the Japanese and U.S. governments conducted coordinated intervention to counter yen depreciation, the Japan-U.S. policy rate differential is seen as a factor behind the yen's weakness. Expectations are spreading that the Bank of Japan will raise rates at its next monetary policy meeting, to be held in September.
Market participants indicated that U.S. monetary policy developments may have made it easier for the Bank of Japan to make a decision, while also expressing the view that movements in long-term U.S. Treasury yields had prompted the rise in Japanese government bond yields.