JGBs steady as central bank decisions loom

Japanese government bonds held steady on Monday, Business Recorder reported, citing Reuters, as markets moved toward a run of key central bank decisions this week. The benchmark 10-year yield eased 0.5 basis point to 2.980%. Yields and bond prices move in opposite directions.

The Bank of Japan holds its policy meeting on September 17-18, and a 25 basis point increase to 1.25% is widely anticipated after hawkish comments from Governor Kazuo Ueda and firm inflation data. Keisuke Tsuruta, a senior bond strategist at Mitsubishi UFJ Morgan Stanley Securities, said in a note that rate hike expectations are likely to swing considerably, making bold positions in the government bond market hard to justify.

In the United States, the 10-year Treasury yield was a little lower at about 4.965% in early trading, as traders saw a high likelihood of a Federal Reserve rate increase this week following a hot inflation report. Higher oil prices linked to Middle East supply risks kept inflation worries elevated. In Japan, the 40-year yield fell 0.5 basis point to 4.10%, while the two-year and five-year yields were unchanged.