Japan bond yields rise as US Treasury selloff persists, BOJ outlook in focus

Japanese government bond yields climbed on Thursday, moving in line with higher American yields from the previous night, according to Business Recorder. The benchmark 10-year JGB yield gained 5 basis points to 3.11%, while the 30-year yield added 6 basis points to reach 4.2%. Investors are still weighing inflation risks and how quickly the Bank of Japan may lift interest rates.

Overnight, US Treasury yields still rose, even though a softer inflation reading for August reduced expectations of a Fed rate increase this month. Revised gross domestic product figures and ADP payroll data suggested the US economy remained resilient. In Japan, the BOJ's quarterly Tankan survey showed business confidence at an eight-year high, which strengthened the case for further rate hikes.

Notes from the BOJ's September meeting, where policymakers lifted borrowing costs 25 basis points to reach a 31-year peak, showed some members wanted faster tightening. A Cabinet Office representative, however, cautioned that higher borrowing costs could weigh on the economy and urged restraint on further increases. Ryutaro Kimura of BNP Paribas Asset Management said political pressure slowing the pace of hikes could push long-term yields higher.