Japan Key Long-Term Rate Hits New 30-Year High

Tokyo, Sept. 15: The 10-year Japanese government bond yield, a crucial long-term interest rate, reached a new 30-year peak of 3.035% on Tuesday following a surge in U.S. long-term rates fueled by soaring crude oil prices. According to Japan Bond Trading Co., the yield on the most recent 383rd issue of 10-year Japanese government bonds (JGBs) surpassed the highest benchmark yield since September 1996.

Crude oil prices spiked due to a halt in operations at a vital oil pipeline in Saudi Arabia that was targeted. The market's apprehension regarding mounting inflation prompted a drop in U.S. 10-year Treasury bond yields above 5%, leading to selling in Japanese bonds. Additionally, worries about the expansionary fiscal policy under Prime Minister Sanae Takaichi's leadership and the anticipation of the Bank of Japan accelerating policy rate hikes further contributed to the JGB sell-off.

The Bank of Japan is anticipated to decide on raising the policy rate to 1.25% during its two-day monetary policy meeting starting Thursday. An official from a Japanese securities firm emphasized that the focus is on what Bank of Japan Governor Kazuo Ueda will convey in a press conference following the meeting concerning the rate hike pace.