Japan’s government bond yield curve flattened, with views on the timing of a Bank of Japan rate hike becoming a market focus. Bank stocks were bought in the afternoon session, while AI and semiconductor-related stocks also moved higher in parts of the market.
Japan’s government bond yield curve flattened on the 27th. BOJ Deputy Governor Himino Ryozo (氷見野良三) indicated a stance of adjusting the degree of monetary easing, prompting attention to rising medium- and long-term yields as markets looked ahead, while super-long-term yields fell.
The 2-year government bond yield briefly reached 1.7%, matching a 31-year high, and 5- and 20-year bond yields also rose, while the 40-year bond yield fell. Deputy Governor Himino Ryozo (氷見野良三) said the timing and pace of rate hikes would be discussed at each meeting, including the September meeting, but did not clearly signal a September rate hike. The yen came under selling pressure at times.
In the bond market, 5-year and long-term yields rose, while the 2-year bond yield also increased. Shimode (下出) of Resona Asset Management indicated a view that short- and medium-term yields would rise while super-long-term yields would fall, and said the speech was hawkish overall.
The market’s focus shifted to the Jackson Hole meeting, with mixed signals over the probability of a BOJ rate hike and the number of rate hikes expected this year. The yen traded in the low ¥159 range and came under selling pressure after Deputy Governor Himino Ryozo’s (氷見野良三) remarks.