JGB yields track U.S. Treasury peers higher as Fed rate cut bets recede

Credit: REUTERS/Dado Ruvic

TOKYO, Feb 5 (Reuters) - Japanese government bond (JGB) yields rose on Monday, tracking U.S. Treasury yields that jumped after the monthly jobs report blew expectations for the U.S. Federal Reserve's imminent interest rate cuts.

The 10-year JGB yield JP10YTN=JBTC jumped 6.5 basis points (bps) to 0.720%, its biggest daily move since Jan. 24, and was last seen at 0.715%.

"There is a view that if the pace for the Fed's rate cut slows, there will be more room for the Bank of Japan (BOJ) to raise rates," said Ataru Okumura, a senior strategist at SMBC Nikko Securities.

"Such view would put upward pressure on JGB yields."

With inflation having exceeded the BOJ's target for more than a year, many market players expect the central bank to end negative rates either in March or April.

The 20-year JGB yield JP20YTN=JBTC rose 5.5 bps to 1.505% and the 30-year JGB yield JP30YTN=JBTC climbed 4.5 bps to 1.790%.

The five-year yield JP5YTN=JBTC rose 4 bps to 0.315%.

The two-year JGB yield JP2YTN=JBTC rose 1.5 bps to 0.110%.

U.S. Treasury yields kept rising in Asian trading, with two-year U.S. Treasury yields touching a one-month high and Fed funds futures were heavily sold, also driven by remarks from Fed Chair Jerome Powell.

Powell said in an interview aired on Sunday that he said wanted to wait to be a little more confident that inflation was sustainably falling before moving interest rates lower.

(Reporting by Junko Fujita; Editing by Rashmi Aich)

((junko.fujita@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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