TOKYO — Japanese government bond yields tested record highs on Tuesday after US President Donald Trump’s attempt to oust Federal Reserve Governor Lisa Cook, raising concerns about inflationary pressures under a potentially more dovish central bank.
The 30-year JGB yield returned to an all-time peak of 3.215 percent , matching Monday’s top, tugged higher by a 5 basis point jump in similarly dated US Treasury yields following Trump’s announcement.
Long-dated Treasury yields rose on expectations of higher inflation under a central bank that would prioritise support for the labour market over taming consumer prices, while short-term Treasury yields – which are more sensitive to the outlook for monetary policy – sank as much as 4 basis points.
The unprecedented highs for the longest-dated JGB yields complicate Tokyo’s aim to rein in the developed world’s biggest debt burden at around 250 percent of GDP. Finance Minister Katsunobu Kato said on Tuesday the ministry would closely monitor JGB market movements and pursue appropriate debt management.
Kyodo News reported that the ministry plans to request more than 32 trillion yen ($217.2 billion) for debt-servicing costs in the budget for the next financial year, a record amount.
“You can’t sugarcoat it. It’s not good,” said Harry Ishikawa, an independent macro strategist and former adviser to Japan’s Financial Services Agency. “The Ministry of Finance will try to cap it. They will tweak issuance or whatever to do that.”
