Japanese bond yields are surging again: Japan's 2Y Government Bond Yield has officially surpassed 0.95%, its highest level since 2008. At the same time, the 10Y Government Bond Yield hit 1.64%, near the highest since July 2008. This follows Tuesday’s auction of 2-year government bonds, which recorded the weakest demand since 2009. The bid-to-cover ratio, a key measure of demand, fell to 2.81 from the previous auction, well below the 12-month average of 3.79. This suggests investors increasingly expect a Bank of Japan rate hike in October and are demanding higher yields to compensate for the risk. Japan is bracing for even higher rates.(The Kobeissi Letter)