Wall Street rises as materials and crypto stocks offset continued bond sell-off
By Satoshi Sugiyama
TOKYO, July 9 (Reuters) - The benchmark 10-year Japanese Government Bond (JGB) yield hit a 30-year high on Thursday, as rising oil prices rekindled inflation concerns and investors remained wary of Japan’s fiscal health.
Here are a few details:
• The 10-year JGB yield rose 1.5 basis points (bps) to 2.880%, the highest since September 1996. Yields move inversely to bond prices.
• The two-year yield, the one most sensitive to Bank of Japan policy rates, increased 1 bp to 1.44%. The five-year yield also rose 1 bp to 1.995%.
• Oil prices jumped after U.S. President Donald Trump said he thought a tentative deal to end the war with Iran was over, pushing U.S. Treasury yields to a multi-week high.
• The finance ministry is set to auction about 2.5 trillion yen ($15.38 billion) of 5-year notes later in the day. Higher yields and signs of demand, reflected in a sharp narrowing in the negative 5-year swap spread since late last month, should support the sale, said Lisa Mochizuki, analyst at SMBC Nikko Securities.
• JGB yields have risen since the government outlined large spending plans in the policy blueprint last month. The blueprint called on the Bank of Japan to align monetary policy with growth efforts, fuelling concerns the government could pressure the BOJ to keep interest rates low and risk falling behind the curve as inflationary pressures build.
• The Japanese government is considering revising language on monetary policy in the economic blueprint, a draft obtained by Reuters showed.
• "In the recent JGB market, yields have been rising on fiscal factors, but one of the biggest problems with fiscal expansion is that it increases inflation risks," said Ataru Okumura, chief rate strategist at SMBC Nikko Securities, in a note.
($1 = 162.5500 yen)
