TOKYO —Japanese government bonds slid on Friday, pushing benchmark yields to a two-week high, after overnight losses in US Treasuries and as traders evaluated pressure on the central bank to raise interest rates.
Demand for safer assets also diminished as domestic shares rallied and data showed Japan’s economy grew much faster than expected in the second quarter.
The yield on the 10-year JGB rose 1 basis point (bp) to 1.56 percent after earlier touching 1.565 percent, the highest since July 31. Futures for the bonds fell 0.06 yen to 137.91.
JGBs fell on Thursday following comments by US Treasury Secretary Scott Bessent that the Bank of Japan will likely be raising interest rates as it is behind the curve in dealing with the risk of inflation. Japan’s economy minister Ryosei Akazawa said on Friday Bessent’s comments were not a call for action by the BOJ.
“We think the Bank will pursue discussions with an eye to raising rates, possibly by the end of the year,” Yusuke Matsuo, senior market economist for Mizuho Securities, wrote in a note. “If the BOJ maintains this stance, we do not think the Trump administration will express an active intention to intervene against the Bank or the Japanese government.”
