TOKYO, May 22 (Reuters) - Japan's 10-year government bond yield rose to an 11-year high of 1% on Wednesday amid mounting bets for further Bank of Japan policy tightening this year, while a weak auction of 40-year debt added to the pressure for higher yields.
The 10-year JGB yield was last 1.5 basis points (bps) higher at 0.995%, retreating slightly after touching 1% for the first time since May 2013, the very early days of former BOJ Governor Haruhiko Kuroda's unprecedented policy-easing experiment.
"If rate expectations are going to increase, Japanese government bond yields across the curve, particularly for the 10-year, are going to rise more," said Shoki Omori, chief Japan desk strategist at Mizuho Securities.
"The 10-year yield may go as high as 1.2% in coming weeks."
The benchmark yield has climbed as much as 27.5 bps since the end of March, when current governor Kazuo Ueda lifted interest rates for the first time since 2007.
Ueda suddenly adopted a more hawkish tone two weeks ago, as the weakest yen in 34 years risked derailing a virtuous cycle of mild inflation supporting higher wages.
Analysts at ANZ said in a client note they expect the BOJ to raise its policy rate by 15 bps at its next meeting in mid-June, then follow with a 25 bps hike in October. (Reporting by Kevin Buckland; Editing by Kim Coghill)
