Japanese government bond yields hit record high

VTV.vn - Japanese government bond yields continued to climb to their highest level in nearly 20 years, with the 10-year term reaching 1.917%.

The central bank is "actively gathering information on companies' views on wage increases"

This puts the Bank of Japan in a difficult position: if it raises interest rates, yields could rise further; if it holds or cuts rates, inflationary pressures—which have been running above its 2% target for 43 months—will intensify.

The rise in yields has pushed up government borrowing costs, as Japan, already with public debt at nearly 230% of GDP, prepares for its biggest post-pandemic stimulus package. The 11.7 trillion yen new bond issuance to finance Prime Minister Sanae Takaichi’s supplementary budget is 1.7 times larger than the 2024 issuance under former Prime Minister Shigeru Ishiba.

BOJ Governor Kazuo Ueda told business leaders in Nagoya that the central bank is "actively gathering information on companies' views on wage increases." Investors viewed the comments as a step toward wage increases, as the governor has repeatedly said he would consider wage growth dynamics next year before adjusting the level of monetary easing. "The mechanism by which both wages and prices have risen moderately has been restored," Ueda said. He added that the bank "will consider the pros and cons of raising the policy rate and make an appropriate decision."

These comments have raised investor caution about the possibility of a rate hike in December.

Mr. Ueda's comments came after other members of the Policy Board expressed their views on the possibility of a rate hike. "I can't say exactly which month we will raise rates, but in terms of distance, we are very close," Board member Kazuyuki Masu said in late November.

Speculation about higher interest rates has helped the yen gain against the dollar. The Japanese yen briefly rose to around 155.40 yen per dollar, its highest level since Nov. 19.

The stronger yen has hurt exporters’ earnings as they repatriate dollar earnings. The currency’s move on the morning of December 1 triggered a sell-off in stocks, with the Nikkei 225 index falling 952.22 points, or 1.9%, to 49,301.69 in the morning session.

Source: https://vtv.vn/loi-suat-trai-phieu-chinh-phu-nhat-ban-cao-ky-luc-100251204230806541.htm