Japan’s two-year yield hits highest since 2008 on rate-hike bets

Japan’s two-year note yield rose to its highest level since 2008, and the yen gained against the dollar on signs an interest-rate hike by the Bank of Japan is getting closer.

The two-year rate, which is sensitive to monetary policy expectations, rose one basis point to 1%. Yields on both five-year and benchmark 10-year bonds climbed about four basis points to 1.35% and 1.845% respectively. Japan’s currency strengthened as much as 0.4% to 155.49 against the dollar.

In a closely watched speech on Monday, BOJ Gov. Kazuo Ueda said the central bank will consider the pros and cons of raising the policy rate and make decisions as appropriate. The likelihood of its economic outlook being realized is rising, and conditions would still be accommodative even if the policy rate is raised, he said in Nagoya.