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[MARKET ANALYSIS] JGB yields rise to multi-decade highs on hawkish BoJ speak

JGB yields hitting multi-decade highs signals a significant shift in market expectations following hawkish comments from the Bank of Japan.

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[MARKET ANALYSIS] JGB yields rise to multi-decade highs on hawkish BoJ speak

Notable FX Option Expiries for today's NY cut: Large EUR/USD near-the-money clips

Newsquawk Daily European Equity Opening News - 14th May 2026

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  • JGB yields continue to rise with the 10-year (2.63%) now trading at levels not seen since 1997. The 30-year now up to the highs seen in January, where PM Takaichi called a snap election, spurring fiscal expansion fears.
  • Yields in Japan have remained elevated throughout the Iranian conflict and amidst growing fears of further fiscal expansion. PM Takaichi recently pledged to resume household electricity subsidies, though the government has attempted to alleviate fears by suggesting it would not need a supplementary budget.
  • On the monetary policy side of things, expectations of a near-term rate hike have risen following the BoJ SOO earlier in the week and the aftermath of a hawkish commentary via BoJ’s Masu earlier today. He stated that there is a need to raise rates at the earliest stage possible, highlighting risks surrounding the JPY’s depreciation. As it stands, markets assign a 64% chance of a hike in June and fully priced in by September.
  • The 30-year auction overnight gave an indication that demand remains strong, at these elevated yields. The b/c rose to 3.49 (prev. 3.12), though the wider tail suggests that some buyers are potentially holding out for a 4% yield.
Context

Increased anticipation of a rate hike—now assessed at a 64% probability for June—reflects heightened concerns over the yen's depreciation and fiscal expansion fears amid ongoing government subsidy pledges. This dynamic is critical as it suggests a possible tightening of Japan's monetary policy, affecting cross-asset markets, especially within fixed income and currencies.

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