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Rising long-end JGB yields highlight BoJ tightening risk

Markets are pricing about a 50% chance of a 25 basis point BoJ hike in September, with a full hike by year-end.

Reported · Written up by our desk · Central Banks

BNY’s Wee Khoon Chong said rising long-end Japanese government bond yields reflect growing inflation and fiscal concerns, a setup that can increase pressure for further Bank of Japan tightening, according to FXStreet.

FXStreet noted that markets are pricing roughly a 50% chance of a 25 basis point BoJ hike in September and a full hike by year-end, while the BoJ’s July meeting Summary of Opinions pointed to accommodative conditions but signaled a tilt toward tightening.

Chong added that long-end JGB pressure is building, and that the risk could intensify if the BoJ delays action, since the inflation and fiscal concerns are already weighing on the long end of the curve.

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