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. Treasuries 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

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. Treasuries 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.