Japanese 10-yr bond yields soar to 30-yr high amid bets on more rate hikes
Japanese benchmark government bond yields surged to a 30-year high on Thursday, following a sell-off in U.S. markets and rising confidence that central banks will continue tightening monetary conditions. The 10-year yield jumped 2.5% to 3.058%, marking its highest level since August 1996. This followed a 19-year high for U.S. 10-year rates, breaching the 5% threshold overnight.
The surge was primarily fueled by expectations of further interest rate hikes in developed economies. U.S. purchasing managers index data revealed persistent strength in the world's largest economy, suggesting potential for higher inflation and enabling the Federal Reserve to raise rates further. Japanese PMI data released earlier indicated continued economic growth.
This development follows the Bank of Japan's recent rate hike to a 30-year high, indicating a possible series of hikes to combat persistent inflation. An overnight spike in oil prices and a strong dollar further heightened concerns about inflation and its implications for monetary policy, simultaneously putting pressure on the yen.
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