Japanese government bond yields fell to multi-month lows on Friday as investors sought safety during a tech-led equity selloff. The 10-year yield dropped 14.5 basis points to 2.61%, while traders saw a 58% probability the Bank of Japan would leave rates unchanged in December.
Japanese government bonds rallied on Friday as investors sought traditional safe-haven assets during a deepening tech-led equity selloff. The 10-year yield fell 14.5 basis points to 2.61%, its lowest since June 26; the two-year yield lost 13.5 basis points to 1.72%, and the five-year yield declined 16.5 basis points to 2.025%.
The selloff prompted investors to reassess the likelihood of a Bank of Japan rate hike next month. Traders saw a 58% probability of rates remaining unchanged in December, against 42% odds of a hike. Yusuke Matsuo of Mizuho Securities said prolonged market turmoil would likely make the BOJ more cautious about raising rates.
The 20-year yield dropped 8.5 basis points to 3.51%, while the 30-year yield eased 4 basis points to 3.805%, after a rebound in Brent crude rekindled longer-term inflation worries. Japan’s Topix fell about 6% and the Nikkei lost 5.7%.
