BOND REPORT: Global Bond Yields Continue Their Rise, Prompting Bank Of Japan To Intensify Intervention

By Rachel Koning Beals Features Dow Jones Newswires

Germany's bund yield at 18-month high

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Japan's benchmark 10-year government bond yield rose at one point Friday to 0.105%, its highest since Feb. 3, a market move that sparked fresh efforts by the Bank of Japan to stymie the climb in market interest rates.

The yield move is part of a global-wide surge among market interest rates. Investors are dumping bonds amid signals from central banks that an era of easy monetary policy, and ultra-low interest rates, is winding down. Bond yields rise as their prices fall.

The yield on the 10-year Japanese government bond later slipped back to 0.085%, after the BOJ said it would buy an unlimited amount of government bonds maturing in five to 10 years at a yield equivalent to 0.110% and raised the amount the amount of bonds it said it would buy at a regularly scheduled auction, the Wall Street Journal reported. The central bank's target is 0% for the benchmark, part of its longstanding policy to help prop up the domestic economy.

The yield on benchmark German government bonds, known as bunds , rose to its highest level in 18 months, 0.57%.

The yield on the benchmark 10-year Treasury rose 1 basis point to 2.379%, trading at its highest levels since early May. The yield on 30-year bond rose 1 basis point to 2.911%. Its jump of more 10 basis points on Thursday was its largest single-day gain in more than two months.

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The yield on the shorter two-year note , which had ticked lower in the previous session, was at 1.427% early Friday, up about 2 basis points. A basis point is equal to one hundredth of a percentage point.

Markets are readying for the highly anticipated U.S. jobs report on Friday (http://www.marketwatch.com/story/us-forecast-to-add-180000-jobs-in-june-but-dont-be-surprised-if-hiring-falls-short-2017-07-06), where investors will be closely following for signs of wage growth, and potential inflation risk amid otherwise mild inflation readings in pricing reports. Economists polled by MarketWatch are expecting 179,000 jobs to be created in June, with the unemployment rate holding steady at 4.3% and average hourly earnings at 0.3%, compared with 0.2% previously.

At the same time that the Federal Reserve is considering further interest-rate increases this year, the European Central Bank has been signaling that it is getting ready to wind down its stimulus efforts after years of aggressive bond buying.

Minutes released from the ECB's June policy meeting out Thursday revealed that Draghi & Co. discussed how to communicate their increasing confidence in the eurozone economy and considered dropping a pledge to accelerate its bond-buying program (http://www.marketwatch.com/story/ecb-considered-abandoning-vow-to-accelerate-qe-2017-07-06).

They follow Wednesday's release of the minutes from the Fed, which is in the early stages of normalizing U.S. monetary policy, with an account of its recent policy conventions (http://www.marketwatch.com/story/fed-might-start-balance-sheet-drawdown-in-september-fomc-minutes-hint-2017-07-05), emphasizing the bank's desire to raise interest rates at least once more in 2017 and begin the reduction of its $4.5 trillion asset portfolio, part of its arsenal of stimulus tools, soon. Based on previous statements from Fed speakers (http://www.marketwatch.com/story/feds-harker-says-plan-to-start-to-shrink-balance-sheet-could-start-in-september-2017-06-21), analysts expect the process to start in September.

(END) Dow Jones Newswires

July 07, 2017 06:44 ET (10:44 GMT)