Bonds fell across Asia with Japanese yields climbing to a six-year high following a report the central bank is debating how soon it can signal rate hikes. Concern about gathering price pressures also weighed on government debt in Australia and South Korea.
Japan’s five-year yields advanced to the highest level since the central bank introduced its negative interest rate policy in January 2016 after Reuters reported policymakers may push up borrowing costs even before annual inflation reaches its target of 2%. That doesn’t mean a rate hike in imminent, though, the report said, citing people it did not identify.
The Japanese Government Bond (JGB) market has become highly sensitive at this point before next week’s Bank of Japan meeting where it’s expected to tweak its price view even if that’s unlikely to lead to any policy change, said Ataru Okumura, a strategist at SMBC Nikko Securities in Tokyo.