Japanese government bond (JGB) yields soared to a decade high on Thursday, influenced by a surge in US Treasury yields. The upward trend in shorter-term two-year and five-year JGB yields, which have reached their highest since June 2014 and a multi-year peak respectively, persists despite the Bank of Japan's (BOJ) repeated unscheduled bond-buying operations aimed at curbing this increase. The 10-year US note yield, currently hovering around 4.97%, has further emphasized the global impact on Japan's bond market.
In the Bank of Japan's October meeting, it was expected that the short-term interest rate would remain at -0.1% and the 10-year bond yield would stay around 0%. The potential revision of the yield curve control policy, which currently has an upper limit of 1%, is under scrutiny due to Japan's record-high 10-year government bond yields, as highlighted by Nikkei. Market predictions suggest a possible phase-out of negative rates in the first half of 2024. This viewpoint is strengthened by Governor Kazuo Ueda's assurance that sufficient data will be available by the end of this year to shape future rate policies.
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