10-Year Treasury Bond Yield Raised to 0.5%

TOKYO, Jan. 5 (Jiji Press) — Japan’s Ministry of Finance on Thursday set the coupon rate for new 10-year Japanese government bonds at 0.5%, up sharply from 0.2% on the previous issue auctioned last month. did.

The interest rate on the 369th new bond auctioned on the same day was the highest since December 2014 for a 10-year government bond.

The rate hikes reflect higher long-term interest rates after the Bank of Japan adjusted for its massive monetary easing policy, putting an even heavier strain on government finances due to higher interest payments.

Thursday’s auction for the 369th issue yielded the highest allowable yield of 0.5 percent, consistent with the BOJ’s new cap on long-term interest rates, according to the Ministry of Finance.

At its latest policy meeting that ended on December 20 last year, the Bank of Japan decided to cap the yield on its latest 10-year government bond, which is seen as the benchmark for Japan’s long-term interest rates, to 0.5%. The decision, which market players deemed an effective rate hike from 0.25%, sent benchmark yields up to 0.48% the next day.

[Copyright The Jiji Press, Ltd.]