Japan bonds rally as stock rout triggers rush for safe assets
TLT•Japanese government bond yields fell to more-than-one-month lows on Thursday as investors sought safe assets after a hot US inflation reading sparked a Wall Street selloff that spilled into Japan. The 10-year yield dropped 6.5 basis points to 2.93%, while the 30-year yield fell below 4% to 3.995%.
1. Japanese yields fall
The benchmark 10-year Japanese government bond yield dropped 6.5 basis points to 2.93%, its lowest since September 10. The 30-year yield fell 4.5 basis points to 3.995%, below 4% for the first time since September 10.
2. Global rate concerns
A hotter-than-projected US inflation reading stoked bets on faster Federal Reserve rate hikes and triggered an equity selloff. US Treasury yields declined sharply after initially rising; the 10-year yield fell almost 9 basis points to 5.1% on Thursday.
3. Other Japanese maturities
The 2-year yield slipped 1.5 basis points to 1.905%, while the 5-year yield lost 4.5 basis points to 2.325%, its lowest since September 18. The 20-year yield fell 6.5 basis points to 3.80%, also its lowest since September 18. Markets were largely unmoved by a speech in which Bank of Japan board member Junko Koeda said the central bank should not become overly cautious about raising rates given considerable upside risks to inflation.
