Japan 10-year yield increases to 1.565%, highest since two thousand eight

Japan 10-year yield increases to 1.565%, highest since two thousand eight

The Japanese government bond (JGB) market experienced a significant shift on Thursday as the benchmark 10-year yield reached 1.565%, marking the highest level since June 2009 [1]. This surge in long-term interest rates comes amid growing speculation that the Bank of Japan (BoJ) will further tighten its monetary policy to combat inflationary pressures and support the country's robust economic growth.

According to data from Kyodo News, the yield on the benchmark 10-year JGB briefly climbed 0.060 percentage point from Wednesday's close, reaching 1.500% on March 6, 2025 [1]. The BoJ's recent decision to raise its policy interest rate to 0.5% in January, its highest level in about 17 years, and Governor Kazuo Ueda's willingness to tighten further, have fueled expectations of additional rate hikes [1].

Furthermore, Japan's economy expanded by 0.7% quarter-on-quarter in the fourth quarter of 2022, exceeding forecasts of 0.3% growth and accelerating from 0.4% growth in the previous quarter [2]. This robust economic expansion, combined with signs of increasing wage hikes and inflationary pressures, has strengthened the case for the BoJ to continue tightening its monetary policy.

Investors are now closely watching the consumer inflation data scheduled for release on Friday for further insights into the future direction of interest rates [2]. While there is still uncertainty about whether the BoJ will raise interest rates again in March, analysts widely expect the central bank to implement further rate hikes later this year.

References:

[1] Kyodo News. (2025, March 6). Yield on 10-yr Japan govt bond hits 1.500%, highest since June 2009. https://english.kyodonews.net/news/2025/03/2f8db122817a-update1-yield-on-10-yr-japan-govt-bond-hits-15-highest-since-june-2009.html

[2] Trading Economics. (n.d.). Japan 10-year government bond yield. https://tradingeconomics.com/japan/government-bond-yield