The nation's most severe labor shortage in almost quarter of a century will support the central bank's inflation target and weaken appetite for already low-yielding bonds.
The Bank of Japan's quarterly tankan survey on Monday showed it has not been so difficult for employers to fill vacancies since 1992, and they expect the situation to get worse. Yields on 10-year Japanese government bonds are seen rising to 0.5 percent by the end of 2016, from 0.3 percent on Tuesday in Tokyo, according to the median estimate of 20 economists surveyed by Bloomberg.
BOJ Gov. Haruhiko Kuroda has stressed the significance of higher wages in achieving his 2 percent inflation goal as oil prices slump and the impact of a weaker yen wears off.