Zhitong Finance has noted that Japanese sovereign bond yields have soared to more than a decade.GamcryptoAt its highest level, there are signs that the Bank of Japan is prepared to reduce bond purchases to ease pressure on the weak yen.
The yen fell slightly to 156 against the dollarGamcrypto.45, falling for the third day in a row.
Japanese 20-year sovereign bond yields rose 3.5 basis points to 1.77 per cent, the highest level since 2013, while 30-year sovereign bond yields reached their highest level since at least 2011. The yield on the benchmark 10-year JGB rose two basis points to 0.96 per cent, slightly below its highest level in more than a decade.
The BoJ offered to buy smaller bonds on Monday, sparking speculation that it would accelerate the normalisation of monetary policy to support the yen. This has shifted the focus to today's auction of five-year Treasuries for more signs of rising yields.
Katsutoshi Inadome, senior strategist at Sumitomo Mitsui Trust Asset Management, said: "there is uncertainty about whether yesterday's reduction in bond purchases is just an one-off. The size could shrink at any time, possibly as early as Friday, which puts upward pressure on yields. "
JGBs have been rising because of rising US Treasury yields and speculation that the Bank of Japan will raise interest rates again sooner or later. The huge yield gap between Japan and the rest of the world, particularly the US, has been driving down the yen.