(Bloomberg) — Japan\u2019s 20-year government bond yield breached its January peak to touch the highest level since 1997, as elevated energy prices add to inflation pressure.<\/p>\n
Most Read from Bloomberg<\/p>\n
The rate advanced 5 basis points to 3.495%, surpassing the previous high of 3.46% set on Jan. 20. The 10-year and 30-year yields also rose 5 basis points to 2.59% and 3.86%, respectively.<\/p>\n
Upward pressure on Japanese government bond yields is building as oil prices remain elevated after the US and Iran rejected each other\u2019s proposals to end the conflict, dimming prospects for a near-term resolution. Meanwhile, Treasury yields have also climbed after US inflation accelerated, prompting traders to increase bets on future Federal Reserve rate hikes, while long-end UK gilts fell on political risks, creating a negative readacross for JGBs.<\/p>\n
\u201cThe upward trend for JGB yields is here to stay, driven by anticipated deficit-triggered higher supply pressure, a weak yen and elevated commodity prices,\u201d said Wee Khoon Chong, senior APAC market strategist at BNY. \u201cThat will likely fuel inflation pressure down the road.\u201d<\/p>\n
A sharp selloff in JGBs in January, driven by concerns over Prime Minister Sanae Takaichi\u2019s fiscal policies, spilled over into US Treasuries. The 20-year sector \u2014 a relatively illiquid security that is more prone to volatility \u2014 played a key role in that move, amplifying swings in the broader market. The episode drew attention from US Treasury Secretary Scott Bessent, highlighting the risk of cross-market contagion.<\/p>\n
The yen has also resumed weakening against the dollar despite multiple rounds of intervention by Japanese authorities, as fundamental pressures and Middle East tensions persist.<\/p>\n
While Japanese authorities have continued to decline to comment directly on whether they intervened, people familiar with the matter have said intervention occurred on April 30, and analysis of the central bank\u2019s accounts indicates intervention from then and through the Golden Week holiday was around as much as \u00a510 trillion ($63.4 billion).<\/p>\n
What Bloomberg strategists say:<\/p>\n
Japanese bond yields are climbing on Wednesday to pour fuel onto a steadily building bonfire across G-10 debt markets.<\/p>\n
Fixed-income investors are edgy ahead of the double jeopardy of 30-year auctions in the next 24 hours or so. Later today there is a Treasuries sale with the tenor which follows on the heels of a tepid 10-year on Tuesday, and then Thursday it is Japan\u2019s turn to sell 30-year bonds.<\/p>\n","protected":false},"excerpt":{"rendered":"(Bloomberg) — Japan\u2019s 20-year government bond yield breached its January peak to touch the highest level since 1997,…\n","protected":false},"author":2,"featured_media":21935,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[17353,3157,7782,9406,3165,8,12203,2640,13444],"class_list":["post-21934","post","type-post","status-publish","format-standard","has-post-thumbnail","category-japan","tag-basis-points","tag-bloomberg","tag-bond-yields","tag-energy-prices","tag-inflation-pressure","tag-japan","tag-japanese-authorities","tag-scott-bessent","tag-treasury-yields"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts\/21934","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/comments?post=21934"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts\/21934\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/media\/21935"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/media?parent=21934"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/categories?post=21934"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/tags?post=21934"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}