Japanese government bond yields rise, market speculates that the Bank of Japan may accelerate interest rate hikes.

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Golden Financial News reported that on June 23, influenced by overnight U.S. Treasury bond performance, Japan’s government bond yields rose slightly on Tuesday, as the market speculated that the Bank of Japan may accelerate its rate hikes to address yen weakness. Amid concerns over sharp currency fluctuations, Japan’s Finance Minister Gōtsuki Kato held an online meeting with U.S. Treasury Secretary Besnett on Monday evening. Japan Broadcasting Corporation (NHK) and Kyodo News reported that Kato and Besnett may have discussed exchange rate issues, which could include the possibility of foreign exchange intervention. Keisuke Tsuruta, a senior bond strategist at MUFG Morgan Stanley Securities, said: “Given that Besnett previously helped create conditions favorable for the Bank of Japan to raise interest rates, this meeting may trigger speculation in the bond market that the Bank of Japan might accelerate its rate hikes to curb yen weakness.” Lisa Mochizuki, an analyst at Sumitomo Mitsui, said: “As the U.S. dollar against the yen rises to the mid-161 range, the Bank of Japan is quite likely to issue a more hawkish signal—for example, hinting at faster rate hikes. In that case, medium-term bond yields may face upward pressure.” (Jin10)
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