TOKYO, March 25 (Reuters) - Japanese government bond
(JGB) yields rose on Tuesday, with shorter-end yields touching
their highest since October 2008, as the recent risk-off mood
eased on hopes of more measured U.S. tariffs.
Concerns about a slate of U.S. tariffs due to take effect on
April 2 lessened somewhat as investors took the latest comments
from U.S. President Donald Trump as a sign of flexibility,
sending Treasury yields drifting upwards on Monday.
JGB yields followed suit, with the 10-year JGB yield
rising 3 basis points (bps) to 1.57%, holding
just under recent highs. The benchmark 10-year JGB futures
fell 0.38 points to 137.46 yen.
The two-year yield and five-year yield
both climbed to their highest since October 2008,
sitting at 0.875% and 1.165%, respectively.
Elsewhere, minutes of the Bank of Japan's January policy
meeting showed policymakers discussed the pace of further
interest rate hikes after deciding to increase rates to their
highest in 17 years.
Last week, the central bank stood pat on rates and warned of
heightening global economic uncertainty amid changing U.S.
tariff policies. Market expectations for additional rate hikes
remained intact, however, with many betting on another hike
around July.
"Barring an escalation of tariff reprisals and a more
adverse economic impact on Japan than expected, the BOJ is
unlikely to halt progress toward a gradual increase in interest
rates," said Ryutaro Kimura, a fixed income strategist at AXA
Investment Managers.
Growing risks that inflation could remain higher than the
bank's 2% goal, after a somewhat stronger-than-forecast wage
negotiation outcome this month, were likely to keep upward
pressure on long-term interest rates, he said.
A continued reduction in the BOJ's purchases of government
bonds could also contribute, he added.
On the superlong end, the 20-year JGB yield
rose 2.5 bps to 2.3%, while the 30-year JGB yield
was up 1 bp at 2.605%.