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JGB yields creep to 11-month highs as Fed tightening worries simmer

·1 min read

TOKYO, Jan 28 (Reuters) - Japanese government bond yields edged higher on Friday, with those on 10-, 20- and 30-year securities reaching 11-month highs, as investors fretted about the effects of a faster pace of U.S. monetary policy tightening.

The 10-year JGB yield rose 1 basis point to 0.165%, the 20-year yield ticked up 0.5 basis point to 0.550%, and the 30-year yield added 1.5 basis points to 0.755%, all hitting the highest since Feb. 26.

U.S. Federal Reserve Chairman Jerome Powell adopted a more hawkish tone on Wednesday, signalling a first interest rate hike in March and saying the central bank would "steadily" remove policy accommodation.

In the wake of that, investment banks have rushed to revise up calls for rate hikes this year, with BNP Paribas, for example, now expecting six quarter-point increases this year, while Nomura predicts a 50-point move in March.

"Even if they don't hike by 50 points, the probability has increased that the Fed could raise rates at every meeting for the rest of this year," said a market participant at a domestic securities firm.

"Yields look likely to stay elevated at least until the March meeting."

The two-year JGB yield was flat at minus 0.055%, holding at a six-year high.

The five-year note didn't trade, and last yielded minus 0.015%. It touched minus 0.010% on Thursday, also a six-year peak.

Benchmark 10-year JGB futures rose 0.04 point to 150.79, rising off an eight-day low of 150.73 touched on Thursday. Trading volume was 15,077 lots. (Reporting by Tokyo markets team; Editing by Subhranshu Sahu)

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