Benchmark JGB yields hit 2-month lows as tech selloff spurs safe-haven demand
TLT•Japan’s 10-year government bond yield fell 8.5 basis points to 2.795%, its lowest level in more than two months, as an overseas tech-led equity selloff drove demand for safe-haven assets.
1. Yields fall across maturities
The benchmark 10-year JGB yield fell for a fifth consecutive day and was set for its lowest close since early August. The 20-year yield eased 5.5 basis points to 3.625%, and the five-year yield dropped 6.5 basis points to 2.225%; the two-year yield was flat at 1.895%, while 30- and 40-year yields were unchanged.
2. Policy and inflation outlook
Economy Minister Minoru Kiuchi said Japan was not yet in a position to officially declare an end to deflation. The Bank of Japan is widely expected to hold rates at its meeting next week after raising them to 1.25% in September, while markets price in the next hike as early as December. Core consumer prices rose 2.1% year over year in September, up from 1.7% in August.
3. Risk aversion supports bonds
A technology-led overseas equity selloff revived concerns about the sustainability of the AI boom and prompted a flight to safety, sending U.S. Treasury yields sharply lower on Thursday. Sony Financial Group senior economist Takayuki Miyajima said JGB yields were likely to face downward pressure as investors tend to buy them when risk aversion rises.
