By Junko Fujita & Brigid Riley
Japan's 10-year government bond (JGB) yield hit a fresh decade high on Tuesday amid speculation that the Bank of Japan will decide to raise a yield cap at its policy meeting.
The 10-year JGB yield jumped 6.5 basis points to 0.955%, its highest since May 2013 and was last seen at 0.950%.
The Bank of Japan will likely revise up its inflation forecasts and discuss further tweaks to its bond yield control at its policy meeting which will end later in the day.
A spike in US.Treasury yields has pushed up JGB yields to decade highs almost every session, with the 10-year JGB yield nearing the BOJ's 1% cap set in July.
The BOJ raised its cap for the 10-year bonds twice in the past and both times the policy was tweaked after the yield crossed the ceiling under accumulated pressure.
"This time the BOJ may do so before the yield hits the cap, which means the pace of the rise in yields in the long term may be slower than before."
The BOJ raised the cap for the 10-year bond yield to 0.5% in December and again in July to 1%.
The two-year bond yield rose to 0.140%, its highest since July 2013.
Source: Reuters
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