Tokyo, December 1, 2025 – Japanese government bond (JGB) yields surged to 17-year highs on Monday, while the yen strengthened, following comments by Bank of Japan (BOJ) Governor Kazuo Ueda that fueled speculation of a potential rate hike as early as this month.

The two-year JGB yield, the most sensitive to BOJ policy, rose 2 basis points (bps) to 1.01%, its highest level since June 2008. The five-year yield climbed 4 bps to 1.350%, and the 10-year yield jumped 4.5 bps to 1.845%, also marking their highest levels since 2008.

Takashi Fujiwara, chief fund manager at Resona Asset Management, noted, "We saw signs from Ueda's speech that the BOJ wants to raise rates in December. He issued these messages to avoid the stock market tanking when the central bank hikes rates."

Speaking to business leaders in Nagoya, home to Toyota Motor and other auto parts firms, Ueda said the BOJ was actively collecting data on corporate wages. "Ueda trying to confirm wage growth in Nagoya is very meaningful," Fujiwara added.

JGB yields have been rising across the curve amid growing expectations of a BOJ rate hike, especially following recent declines in the yen. A weakening yen increases import costs, which can raise domestic prices, further supporting rate hike speculation.

The yen strengthened as much as 0.4% to 155.53 against the dollar during Ueda’s remarks.

Investors also considered the impact of Prime Minister Sanae Takaichi’s stimulus plan, which has contributed to rising yields on longer-dated bonds. The 20-year JGB yield climbed 3 bps to 2.855%, and the 30-year yield increased 5 bps to 3.385%.