Japan's Long-term Interest Rates Rise to 1.075%, Highest in 12 Years

May 30, 2024 | News On Japan

TOKYO - Long-term interest rates rose, with the yield on newly issued 10-year government bonds in the Tokyo bond market reaching 1.075% at one point, 0.04% higher than the previous day's closing rate. This marks the highest level in about 12 years.

The yield on 10-year government bonds, a key indicator of long-term interest rates, serves as a benchmark for fixed mortgage rates and corporate lending rates. Thus, a rise in yield can impact households and corporate activities.

The rise in yields was influenced by remarks from officials at the Federal Reserve in the United States, which led to speculation that the start of rate cuts in the US might be delayed. This, in turn, drove up the yields on long-term US government bonds. Additionally, speculation that the Bank of Japan might reduce its bond-buying in a move towards financial normalization led to selling pressure on Japanese government bonds.

As a result, the yield on 10-year government bonds temporarily climbed to 1.075%, the highest level in about 12 years.

Masahiro Ichikawa, Chief Market Strategist at Sumitomo Mitsui DS Asset Management, analyzed, 'The behavior of the Bank of Japan will determine the actions of participants in the bond market, who are cautiously observing the situation to find a balance. There are no decisive factors expected until the monetary policy meeting next month, but the trend for long-term interest rates is likely to continue rising gradually.'

Source: ANN

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