TOKYO -- Long-term interest rates are increasing in Japan, the U.S. and Europe amid improved economic fundamentals and tighter government bond supplies.
The yield on newly issued 10-year Japanese government bonds climbed to 0.505% on Thursday, the highest in six-and-a-half months. The long-term rate in Germany flirted with 1% for the first time in more than eight months at one point, while the U.S. rate climbed to the 2.4% level, a seven-month high.
The upturn was triggered by rising prices in the eurozone. The consumer price index for May, released Tuesday, showed the first year-on-year increase in six months. This eased concern about deflation, spurring bond selling of debt issued by Germany, Spain, Italy and the U.K.
In the U.S., where the CPI for April topped forecasts, an improved job market is raising expections for the economic recovery and fueling bond sales. In Japan, big investors are unloading Japanese bondholdings to offset losses on foreign bonds.
The fast-rising rates were also brought on by massive bond purchases by central banks. The volume of bonds available on the market has decreased, making rates susceptible to sharp swings. Investors concerned about such fluctuations grow cautious about trading, and this, in turn, exacerbates rate moves even more.
Still, stocks in Japan, the U.S. and Europe remained firm on Wednesday and Thursday.
"The rises in interest rates fall within the scope of adjustment from ultralow levels," says Masanaga Kono, investment information manager at Amundi Japan. "The impact on corporate earnings will be limited."