Japan’s short-term yields hit multi-decade highs as markets raise bets on further BOJ tightening
📈 Japan’s two-year government bond yield has climbed to 1.32%, the highest level since 1996, while the five-year yield rose to 1.74%, also marking its highest level since that tenor was first issued. The move suggests markets are rapidly repricing expectations for the BOJ’s rate path.
💴 The main drivers are persistent inflation pressure, a weaker yen, and rising energy costs, leading investors to believe the BOJ may continue raising rates in Q2. When short-term yields rise this quickly, it usually signals that policy expectations are shifting in a more hawkish direction.
🌍 For global markets, this move not only supports JPY but could also add pressure to carry trades and broader risk sentiment across Asia. The BOJ meeting at the end of April is therefore becoming one of the most important upcoming catalysts for the FX market.