Japan's 5-Year Bond Yield Surges to 15-Year Peak

13 Nov 2024 , 02:10 PM

A weaker yen fuelled speculations that the Bank of Japan would raise interest rates, and on Wednesday, the yield on Japan’s five-year government bonds reached a 15-year high.

The 30-year JGB yield increased 1.5 basis points to 2.275%, while the 20-year JGB yield increased 2.5 basis points to 1.87%. At 2.6%, the 40-year JGB yield increased 2.5 basis points.

The five-year yield increased 3 basis points (bps) from the previous day to reach its highest level since November 2009, 0.685%, before edging down to 0.68%.

The yield on the 10-year JGB increased 3.5 basis points to 1.04%, the highest level since August 1.

As bond investors returned to the market after a long weekend and resumed pricing in President-elect Donald Trump’s ideas of lower taxes and trade tariffs, which are seen as inflationary, U.S. Treasury rates increased overnight.

The yen dropped to its lowest level since July 30 at 154.94 vs the US dollar. Domestic prices rise as a result of the weakening yen, which also increases import expenses.

After losing the lower house majority in last month’s election, the ruling Liberal Democratic Party (LDP) and its coalition partner Komeito have been looking to work with the Democratic Party for the People (DPP), which advocates for generous welfare spending and tax breaks.

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