In the Tokyo yen bond market on the 1st, the yield on the new 10-year government bond, a key indicator of long-term interest rates, briefly reached 3.00%, the highest level in 30 years since September 1996. Concerns over inflation and fiscal deterioration have led to views that reaching 3% is merely a waypoint. Expectations of further rate hikes by the Bank of Japan and wariness over the aggressive fiscal policy of the Takaichi administration have prevented the dissipation of expectations for higher rates, and the day's 10-year bond auction was also seen as weak. The yield on the new 2-year bond rose to 1.795%, the highest since 1995, and the yield on the new 5-year bond briefly hit a record high of 2.265%. In the market, there is a strong view that inflation concerns will persist toward year-end due to wariness over fiscal policy, higher energy prices from heightened tensions in the Middle East, and a weaker yen. Daisuke Uno of Sumitomo Mitsui Banking Corporation said, "Until the Takaichi administration retracts its aggressive fiscal policy, upward pressure on interest rates will continue," and Eiji Doke of SBI Securities predicts that the range for long-term rates could "reasonably rise to 3-3.25%."
10-year JGB yield rose to 3.00%, highest since 1996, on BOJ rate hike expectations and fiscal concerns.
2-year JGB yield rose to 1.795%, highest since 1995, reflecting BOJ rate hike expectations.
5-year JGB yield hit record high of 2.265% on inflation and fiscal concerns.
