Japan 10-Year Government Bond Yield Hits 1%... Highest Level in 11 Years

"Realization of a World with Interest Rates"

The 10-year government bond yield, a key indicator of long-term interest rates in Japan, temporarily reached 1% in the Tokyo bond market on the 22nd, according to Nihon Keizai Shimbun (Nikkei).

This is the first time in 11 years since May 2013 that the 10-year Japanese government bond yield has exceeded 1%.

[Image source=Yonhap News]

The 10-year government bond yield in Japan recorded 0.975% on the 20th and 0.98% on the 21st, marking the highest level in 11 years for three consecutive days.

Nikkei explained that the rise in government bond yields is due to increased expectations that the Bank of Japan (BOJ) will raise interest rates further after its monetary policy meeting in March, where it raised rates for the first time in 17 years.

Nikkei analyzed, "With the BOJ's large-scale bond-buying monetary easing policy, long-term interest rates had remained in the 0% or negative range for a long time, but reaching 1% has made a 'world with interest rates' a reality."

Kyodo News reported that the BOJ's announcement on the 13th to reduce the scale of long-term government bond purchases also appears to have had an impact.

Shoki Omori, Chief Strategist at Mizuho Securities, said, "If expectations for interest rate hikes increase, Japanese government bond yields, especially the 10-year yield, will rise further," adding, "It will rise to 1.2% within the next few weeks."