Japan's 10-year yields hit 17-year peak ahead of Powell speech

Japanese 10-year government bond yields climbed to a fresh 17-year peak on Friday, tracking a rise in U.S. Treasury yields as investors braced for a speech by Federal Reserve Chair Jerome Powell at the U.S. central bank's Jackson Hole symposium.

The 30-year JGB yield added 2 bps to 3.20%, matching the record high from July 15.

The 20-year sovereign debt yield advanced 1.5 bps to reach 2.655% for a second straight day, matching the peak from July 15, which was the highest since October 2000.


The 10-year JGB yield added 1 basis point (bp) to 1.615%, the highest level since October 2008.

Benchmark 10-year JGB futures dipped as much as 0.14 yen to 137.42 yen, a nearly one-month low. Yields rise when bond prices fall.

U.S. 10-year Treasury yields climbed close to 4 bps to 4.332% on Thursday, as traders pared back bets on a September interest rate cut by the Fed.

Analysts said market players took cues from purchasing managers surveys that suggested U.S. business activity and hiring have picked up pace appreciably this month, rather than a separate report showing the biggest jump in about three months for new jobless claims.

Market bets on a quarter-point Fed cut next month last stood at 75%, down from 80% a day earlier, according to LSEG data.

Powell speaks later on Friday, the second day of the three-day Jackson Hole gathering. Fed speakers on day 1 overall struck moderately hawkish stances, with Cleveland Fed President Beth Hammack saying she sees no case for imminent policy easing, and Chicago Fed President Austan Goolsbee flagging services inflation as giving him pause on lowering rates.

Japan's so-called super-long yields have been under particular pressure to rise since the nation's ruling coalition lost its upper house majority last month, giving more sway to opposition parties touting consumption tax cuts.

The prime minister has so far refused to step down, resulting in a kind of political limbo that could delay a supplementary budget.

"These risks do not appear to be fully priced in," said Mizuho Securities economist Yasuke Matsuo.

"We think upward pressure on interest rates - particularly in the super-long sector - will need to be closely watched for the time being."

Shorter-dated debt was calmer, with the two-year JGB yield and the five-year yield both flat at 0.855% and 1.15%, respectively.