Japanese government bond yields are rising as investors adjust their positions

Japanese government bond (JGB) yields rose on Monday as investors adjusted their positions, while market reaction to the summary of the Bank of Japan’s policy meeting was limited.BOJ policymakers debated the need to keep raising rates even after a December hike, with one of them calling for hikes every few months, a summary of views showed.

The yen strengthened as much as 0.3% against the US dollar after the summary was published, but the two-year Japanese government bond yield, the most sensitive to the BOJ’s policy rate, rose only 0.5 basis point (bp) to ‍1.155%.

“What was in the summary was almost within the expectations of the JGB market,” said Katsutoshi Inadome, senior strategist at Sumitomo Mitsui Trust Asset Management.

The yield on 20-year government bonds rose by 4.5 basis points to 3.005%. Yields rose sharply as market players adjusted their positions after yields fell to 2,940% last week, Inadome said.

Japanese government bonds gained late this week as expectations for limited debt issuance caused yields to retreat from a 26-year peak. Bond prices move inversely to their returns. The yield on ten-year Japanese government bonds rose by 1.5 basis points to 2.055%.

The 30-year JGBs were not traded as of 0544 GMT and the yield remained at 3.380%.