Bank of Japan Announces 11-Year High in 10-year Government Bond Yield

By Jose Resurreccion

May 20, 2024 03:31 AM EDT

Bank of Japan Announces 11-Year High in 10-year Government Bond Yield
A woman walks past the Bank of Japan headquarters in central Tokyo on April 26, 2024.
(Photo : KAZUHIRO NOGI/AFP via Getty Images)

The 10-year Japanese Government Bond (JGB) rose to its highest level in 11 years on Monday (May 20) after investors speculated that the Bank of Japan (BOJ) might increase the policy rate or slash government bond purchases because of a weak yen. 

Nikkei reported that the yield reached 0.975%, which was a 0.03 percentage point from Friday's closing (May 17). Overall, the JGB yield rose by 0.355% this year as the BOJ strengthened its hawkish stance and has been working on normalizing its current monetary policy.

The last time such a rise happened was back in 2013.

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Japan's Central Bank Reduces Government Bond Purchases

Last week, the central bank decreased its purchases of government bonds with five to 10 years left to maturity to JPY 425 million ($2.7 billion), which was JPY 50 billion less from its previous operation. 

Such signals from the BOJ apparently meant to tame the yen's weakness after it fell past its 34-year low rate of 160 against the US dollar in April, which prompted the BOJ and the Japanese government intervening to prevent the further decrease of the yen's value.

Bloomberg further reported that analysts projected at least three more moves for the yield this year, with Vanguard Group international rates head Ales Koutny expecting hikes of up to 0.75% by the end of the year. 

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