Japan’s 10-year government bond yield held steady around 1.87% on Wednesday, hovering at its highest level in nearly two decades amid speculation that the Bank of Japan could raise interest rates this month. BOJ Governor Kazuo Ueda said recently the central bank would carefully weigh the pros and cons of a rate hike and act “as appropriate.” Swaps markets now price roughly an 80% probability of a December 19 increase, with the odds for a January hike climbing to nearly 90%. Finance Minister Satsuki Katayama added this week that there is no divergence between the government and the BOJ in their economic assessments, highlighting continued alignment between fiscal and monetary policy. Meanwhile, demand remained strong at Japan’s latest 10-year bond auction, with a bid-to-cover ratio of 3.59, well above November’s 2.97 and the 12-month average of 3.2.
