Japanese government bond yields rose on Aug. 27, with the benchmark 10-year JGB yield closing at 2.890% after briefly touching 2.9%, as investors positioned for an earlier Bank of Japan rate hike. Selling picked up after Deputy Governor Ryozo Himino urged timely tightening to keep inflation from overshooting 2%, while stronger-than-expected U.S. personal consumption expenditures data lifted Treasury yields and reduced bets on a narrower Japan-U.S. rate gap. Overnight index swaps priced an 85-90% chance of a September 17-18 increase from the 1% policy rate set in June, when the BOJ raised it from 0.75%. Japan’s core consumer price index rose 1.8% year over year in July, the fastest pace since January, as a weak yen and higher energy costs added pressure. Higher domestic yields could draw Japanese capital back from foreign bonds, including U.S. Treasuries, and remain a flashpoint for yen carry trades. Bank stocks found buyers while some real estate shares and REITs were sold, and the Nikkei fluctuated around the prior close.