Japan's 40-year government bond yield rose about 10bp intraday to 4.010%, and
the 5-year JGB hit its highest level since its 2000 issuance. Moves tracked U.S.
Treasures as oil gains boosted Fed rate-hike expectations. Ataru Okumura, chief
rates strategist at SMBC Nikko Securities, said markets are focused on the Bank
of Japan's slow response to rising oil prices, prompting investors to demand a
higher premium to hold long-dated bonds; with concerns about fiscal expansion
ahead of the government's expected early-August finalization of a consumption
tax-cut plan, yields could rise further.
