JGB yields fall after report says PM Takaichi to vow nimble response to markets
EWJ•Japanese government bond yields fell after a report said Prime Minister Sanae Takaichi would pledge to respond swiftly to unexpected economic and market developments. The 10-year yield slipped 3.5 basis points to 3.05%, while the two-year yield fell 3 basis points to 1.93%.
1. Yields extend declines
Japanese government bond yields extended declines after local media reported that Takaichi would promise a nimble response to unexpected market moves in a policy speech next week. The report said she would also say the government will decide annual debt issuance with an eye on interest-rate developments.
2. Market concerns remain
The 10-year yield fell 3.5 basis points to 3.05%, the two-year yield dropped 3 basis points to 1.93%, the five-year yield fell 4 basis points to 2.365%, and the 30-year yield slipped 2.5 basis points to 4.15%. A strategist said the report could support the bond market, but expressed skepticism about whether the pledge would be executed.
3. Fiscal and auction context
Takaichi’s spending plans have raised investor concerns about Japan’s finances, and the benchmark government bond yield was on track for a fifth consecutive quarter of double-digit increases. The yield decline was also supported by a modestly firm two-year bond auction and easing expectations for a U.S. Federal Reserve rate hike in October.
