Japan's two-year government bond yield rises to its highest level in 30 years amid expectations of interest rate hikes

BlockBeats News, March 26 — Due to market expectations that the Bank of Japan will raise interest rates soon, the yield on Japan’s 2-year government bonds rose to its highest level since 1996. The yield on the 2-year Japanese government bond, which is sensitive to monetary policy expectations, increased by 1 basis point to 1.315%, surpassing the previous high of 1.31% reached last month. The 10-year Japanese government bond yield rose by 2 basis points to 2.270%. Market expectations that oil prices will rise following the outbreak of conflict in Iran are expected to trigger inflation shocks.

Central banks around the world have issued warnings about ongoing price pressures, pushing up short-term yields, while traders have largely dismissed expectations that the Federal Reserve will ease policy this year. Rising oil prices are also putting pressure on the yen, further boosting market expectations that the Bank of Japan may need to continue tightening monetary policy. Overnight index swap data shows that the market assigns a 64% probability that the Bank of Japan will take action in April. (Jin10)