Long-term interest rates in the Tokyo bond market temporarily rose to 2.930%, the highest level in about 30 years since 1996

At the Tokyo bond market on the 17th, the yield on newly issued 10-year government bonds, an indicator of long-term interest rates, rose (and the price fell), briefly reaching 2.930%. Expectations of an interest rate hike by the Bank of Japan and concerns about fiscal deterioration, coupled with uncertainty about the situation in the Middle East and concerns about rising global prices, led to an intensification of moves to sell government bonds.

According to Nippon Mutual Securities, long-term interest rates rose by 0.055% from the end of last week to the highest level in about 30 years since September 27, 1996. Interest rates across a wide range of maturities rose on the 17th, with newly issued two-year bonds at one point reaching 1.690%, the highest in about 31 years, and five-year bonds at one point hitting a record high of 2.170%. 30-year and 40-year bonds also rose.

There is a growing expectation in the market that the Bank of Japan will accelerate the pace of interest rate hikes as prices are pushed up by factors such as the weaker yen. After the Japan-U.S. coordinated foreign exchange intervention at the end of July, U.S. Treasury Secretary Bessent said in the U.S. media on August 4, ``I believe that (Bank of Japan President Kazuo Ueda) will do what is necessary,'' which also supported speculation that the Bank of Japan would move to raise interest rates in September.