Japan's 30-year bond yields climb to record high as rate-hike bets rise

By Kevin Buckland

TOKYO, Dec 2 (Reuters) - Japanese 30-year government bond yields climbed to a record peak on Tuesday and the 10-year yield reached a 17-year high amid growing speculation that the Bank of Japan could raise interest rates as soon as this month.

An auction of about 2.6 trillion yen ($16.7 billion) of 10-year notes later in the day also has the potential to inject additional volatility into the market.

The 30-year JGB jumped 2 basis points (bps) to 3.41%.

The 10-year JGB yield added 0.5 bp to 1.88%, the highest since June 2008.

BOJ Governor Kazuo Ueda said in a speech on Monday that policymakers would consider the "pros and cons" of a December rate hike, sending the strongest signal yet of near-term policy tightening.

He also said in a Q&A session that he had "good discussions" with Prime Minister Sanae Takaichi, which investors took as an indication that the new premier won't stand in the way of higher rates despite previously expressing a preference for easy policy.

"Since it is unusual for the BOJ governor to refer to a specific meeting in such a speech, we believe the likelihood of a December rate hike has further increased," Morgan Stanley MUFG Securities analysts said in a client note. "A December rate hike is our base case."

The two- and five-year yields were both unchanged at the June 2008 peaks reached on Monday, at 1.02% and 1.38%, respectively.

The 40-year yield rose 1.5 bps to reach 3.745%, matching the record high from November 20.

The 20-year JGB had yet to trade, as of 0058 GMT.

($1 = 155.5100 yen) (Reporting by Kevin Buckland; Editing by Christian Schmollinger and Subhranshu Sahu)