JGB yields hit two-week high as inflation hits 40-year high, Fed remains hawkish

By Kevin Buckland

TOKYO, November 18 (Reuters)Yields on Japan’s short-term government bonds hit two-week highs and super-long yields rebounded from one-month lows on Friday as the country’s core consumer inflation hit a low. highest in 40 years and US Federal Reserve officials reiterated their hawkish tone.

The return of the JGB at five years JP5YTN=JBTC rose 2 basis points to 0.090%, while the two-year yield JP2YTN=JBTC rose 0.5 basis points to -0.040%, both reaching their highest levels since November 4.

The yield of the JGB at 20 years JP20YTN=JBTC rose 1.5 basis points to 1.045%, after starting the day touching 1.020%, its lowest since Oct. 11.

JGB yield at 30 years JP30YTN=JBTC rose 1 basis point to 1.405%, from a low of 1.385%, which before Thursday had not been seen since Oct. 7.

The national basic consumer price index (CPI) rose 3.6% from a year earlier, confirming that inflation remained above the Bank of Japan’s 2% target for a seventh consecutive month.

The data suggests that Japanese companies may be shedding their deflationary mindset as they apply price increases to a wider range of products.

The BOJ has remained a steadfast outlier in the global monetary tightening trend, sticking to extraordinary stimulus measures to support the economy.

“If this continues, it might give people more reason to talk about a possible change in monetary policy,” said Masayuki Kichikawa, chief macroeconomic strategist, Sumitomo Mitsui Asset Management.

“Compared to six months ago, there is some change in the mindset of businesses and consumers.”

James Bullard, Chairman of the St. Louis Federal Reserve said overnight, more interest rate hikes are needed, with these comments backed by Data showing continued tensions in the US labor market.

Benchmark 10-Year JGB Futures 2JGBv1 down 0.13 points to 149.37.

The yield of the JGB at 10 years JP10YTN=JBTC was stable at 0.240%. The BOJ keeps it at 25 basis points on either side of zero as part of its yield curve control policy.

(Reporting by Kevin Buckland; Editing by Rashmi Aich)

(([email protected];))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Carol N. Valencia