Japanese government bond yields ticked up on Tuesday following moves in
overnight US Treasures, stoking market speculation the Bank of Japan could
speed up rate hikes to counter yen weakness. Japan’s finance minister Katayama
held an online call with US Treasury Secretary Bessent on Monday amid volatile
FX; NHK and Kyodo reported the talks likely covered the exchange rate and may
have included the possibility of FX intervention. Mitsubishi UFJ Morgan Stanley
Securities senior bond strategist Keisuke Tsuruta said Bessent’s past actions
have helped create conducive conditions to BOJ tightening and that the meeting
could prompt market bets on faster hikes. Sumitomo Mitsui analyst Lisa Mochizuki
noted USD/JPY in the mid-161s increases the likelihood the BOJ will signal a
more hawkish stance, which could push mid-dated JGB yields higher.
