Short-term JGB yields jump to multi-decade highs on BOJ rate-hike bets

Business Recorder, citing Reuters, reported that Japanese government bonds weakened on Friday, lifting shorter-dated yields to historic peaks. Expectations were building for a Bank of Japan rate increase next month. The two-year yield rose 0.5 basis point to 1.650%, its highest level since May 1995.

The five-year yield advanced 1.5 basis points to a record 2.135%, extending its gains to a fifth session. The 10-year benchmark edged up 0.5 basis point to 2.875%. Three people briefed on the central bank's thinking said it is set to raise rates as early as September, possibly speeding up hikes afterwards.

Sony Financial Group economist Takayuki Miyajima said speculation about an early rate hike was still weighing on the market. Former currency diplomat Mitsuhiro Furusawa told Reuters that Tokyo could signal faster increases to curb the yen's slide. Thursday's producer price data, up 7.2% from a year earlier, came in slightly under forecasts but still supported a hike.