Japan 10-Year Government Bond Yield at 0.975%... Highest Since 2013

Japan's long-term interest rate indicator, the 10-year government bond yield, reached its highest level since May 2013.

The yield on Japan's 10-year government bonds temporarily hit 0.975% on the day. This represents an increase of 2.5 basis points (bp = 0.01 percentage points) compared to the previous trading day.

[Image source=Yonhap News]

The Nihon Keizai Shimbun (Nikkei) analyzed that the pressure for long-term interest rates to rise has increased as expectations spread that the Bank of Japan (BOJ) will raise rates again after its first rate hike in 17 years at the March Monetary Policy Meeting. It is also understood that the BOJ's announcement on the 13th to reduce the scale of long-term government bond purchases had an impact.

Naoya Hasegawa, Chief Bond Strategist at Okasan Securities, stated, "The 10-year government bond yield rose on the back of expectations that the BOJ will raise rates faster and reduce bond purchases."

Bloomberg reported that the rise was due to expectations that the BOJ will raise rates and defend against yen weakness.

Experts are paying close attention to the BOJ's next steps. Pacific Investment Management Company (PIMCO) expects the BOJ to raise rates three times this year. Ales Koutny, Head of International Rates at Vanguard Group, forecasts that rates will reach 0.75% by the end of the year.

Goldman Sachs strategists predict that Japan's 10-year government bond yield will rise to 2% by the end of 2026, driven by expectations that the BOJ will prolong its tightening cycle. George Cole and Bill Zhu of Goldman Sachs expect the BOJ to raise rates to between 1.25% and 1.50% by 2027.