Japan 10-year JGB yield rises as BOJ seen weighing faster rate hikes

Japan government bond yields climbed on Wednesday, with the 10-year JGB rising 2 basis points to 2.725% in early Tokyo trade and touching around 2.74%, a one-week high. The move reflected higher U.S. Treasury yields and growing expectations that the Bank of Japan could raise interest rates faster than markets currently anticipate if yen weakness and higher fuel costs lift inflation more than expected. Reuters, citing three sources familiar with the BOJ’s thinking, said some officials see room to move more quickly than the dominant market view of twice-yearly hikes, though policymakers broadly say timing should depend on incoming economic and price data. Investors were also watching a Finance Ministry auction of about JPY 300 billion in 40-year government bonds, while Japan’s trade balance returned to a deficit in June as import growth outpaced exports.