Policy-sensitive two-year JGB yield rose as much as 4bps to 1.975% on Monday,
approaching the key 2% level and marking its highest since 1995. Other tenors
were under pressure: the five-year yield climbed 3bps to 2.43%. SMBC Nikko
Securities strategists Omura and colleagues said in a note that greater domestic
and foreign attention on yen weakness is fueling trades betting on faster BOJ
tightening, and that fiscal expansion in major economies plus rising commodities
prices could further reinforce market expectations that Japan may ultimately
need to tighten policy to curb inflation.
