FX.co ★ Japanese Yields Track Treasury Yields Higher

Japan’s 10-year government bond yield rose to around 3.1% on Friday, its highest level since 1996, tracking an upswing in US Treasury yields amid growing expectations that the Federal Reserve will further tighten policy to contain inflation. Global bond markets continued to struggle with elevated oil prices, which are adding to inflationary pressures, though reports that the US and Iran are considering a phased agreement offered some relief. Meanwhile, the latest US Treasury bond buyback operation fell short of expectations, with the Treasury purchasing only $4.078 billion of 20- and 30-year bonds, compared with $10.4678 billion offered. Domestically, former Bank of Japan board member Makoto Sakurai said the central bank is likely to raise interest rates roughly once every three months, potentially pushing the policy rate to about 2% by around June next year as it seeks to address mounting inflationary pressures.