Key Takeaways
- Japanese government bond yields increased, with the 10-year JGB yield rising to 2.93%.
- BOJ board member Kazuyuki Masu suggested faster rate hikes if inflation accelerates.
- Oil prices surged to over $100 a barrel following attacks on Iranian ships near the Strait of Hormuz.
Japanese government bond (JGB) yields rose on Thursday, with the 10-year JGB yield increasing by 5 basis points to 2.93%, according to market reports.
The 2-year JGB yield, which is particularly sensitive to monetary policy expectations, also saw a rise of 1.5 basis points to 1.845%.
These increases came as a result of escalating Middle East tensions, which led to a surge in oil prices, with Brent crude rising above $100 a barrel for the first time since late July.
The Bank of Japan (BOJ) board member Kazuyuki Masu made a hawkish statement, suggesting that the bank may need to raise interest rates rapidly if inflation accelerates, given Japan’s current accommodative financial conditions.
Market participants are closely watching the BOJ’s next rate decision, which is expected to be announced on the following Friday.
Mizuho Securities senior market economist Yusuke Matsuo noted that the BOJ Governor Kazuo Ueda is likely to take a hawkish line in his post-meeting press conference, but there is a risk that such communications could be interpreted more dovishly than anticipated.
The 20-year JGB yield climbed 5 basis points to 3.75%, and the 30-year yield advanced 5.5 basis points to 4.01%, while the 5-year yield added 3 basis points to 2.25%.
Iran’s attacks on 10 ships near the Strait of Hormuz, following the US sinking of five Iranian oil tankers, contributed to the oil price surge, which in turn affected JGB yields.
