TOKYO, Feb 14 (Reuters) - Japanese government bond (JGB) yields rose on Wednesday, tracking their U.S. peers at the same time that a weakened yen ramped up expectations that the Bank of Japan (BOJ) will normalise its ultra-easy monetary policy in March.
The 10-year JGB yield was last up 2.5 basis points (bps) at 0.750%, and touched its highest since Dec. 12 at 0.765% earlier in the session.
U.S. Treasury yields, which Japanese yields tend to follow, climbed overnight after the domestic consumer price index (CPI) report surprised to the upside. The 10-year yield then hit a fresh 2-1/2-month high of 4.332% in the Asian morning.
"With U.S. yields on the rise, this is an environment where it's easy for JGB yields to go up," said Resona Holdings' strategist Takeshi Ishida.
At the same time, the U.S. dollar has jumped, pushing the yen back to the psychologically significant range of 150 per dollar for the first time since November. With U.S. yields on the rise again and the yen languishing, there's a sense in the market that the BOJ will have to exit from negative interest rates in March, said Ishida.
"I think (the weakening yen) is putting a lot of pressure" on the Bank, he said.
The BOJ's monetary policy, made up of yield curve control (YCC) and negative short-term rates, has faced criticism from analysts and some politicians for causing sharp yen falls that boost import prices and the cost of living for households.
Many market players have seen April as the most popular timing for an exit, according to a Reuters poll taken last month.
The two-year JGB yield ticked up 1.5 bps to a 3-1/2-month peak of 0.140%.
The five-year yield rose 2.5 bps to its highest since Dec. 11 to 0.365%. The 20-year JGB yield was up 1.5 bps at 1.520%.
The 30-year JGB yield sat 2 bps higher around a two-week high of 1.810%. (Reporting by Brigid Riley; Editing by Sonia Cheema)
