Editor's PiCK
Japan 2-year government bond yield tops 1%…Sign that BOJ rate hike is imminent
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Summary
- Japan's 2-year government bond yield rose to 1%, marking the highest level since 2008.
- This is seen as a signal that the Bank of Japan (BOJ) is about to raise interest rates.
- Experts say that if the Japanese 10-year government bond yield nears 2%, market shocks such as yen weakness, increased volatility in the Japanese stock market, and repatriation of overseas assets could occur.
Japan's 2-year government bond yield rose to 1%, marking the highest level since 2008.
On the 1st (local time), according to The Japan Times, Japan's 2-year government bond yield rose 1bp to 1%. The 5-year yield climbed to 1.35% and the 10-year yield to 1.845%, with yields surging across the curve.
The outlet interpreted this as "a typical signal that the market believes the Bank of Japan (BOJ)'s rate hike is imminent." In foreign exchange markets, the yen also strengthened, trading around 155.49 yen, up 0.4% against the dollar.
The market is pricing in about a 76% chance that the Bank of Japan will raise rates at its December 19 meeting, and including the January meeting the probability of a hike exceeds 90%.
Meanwhile, with US and European government bond yields remaining at high levels and Japanese yields rising rapidly, concerns are being raised that the global financial market's 'last low-rate anchor' is being shaken. Experts warn that if the Japanese 10-year yield approaches or surpasses 2%, it could trigger a chain of market shocks such as yen weakness·increased volatility in the Japanese stock market·and repatriation of overseas assets.
