JGBs bounce back following rout that sent yields to multi-decade highs

• The benchmark 10-year JGB yield JP10YTN=JBTC slipped 2 basis points (bps) to 2.915%, down from as much as 2.945% in the previous session that was the highest since September 1996.
• The 2-year JGB yield JP2YTN=JBTC, the one most sensitive to Bank of Japan policy rates, fell 1 bp to 1.675%, while the 5-year yield JP5YTN=JBTC dipped 1 bp to 2.140%.
• Long-term borrowing costs from the U.S. to Germany and Japan hit their highest in decades on Tuesday, reflecting concerns about ballooning government debt and inflation caused by persistently high oil prices amid the Middle East conflict.
• The 5-year JGB yield set a record high on Tuesday and the 2-year yield reached a 31-year peak as expectations solidified that the BOJ will raise interest rates next month.

• On Tuesday, an auction of 5-year JGBs saw the highest level of demand since June 2025. The Ministry of Finance will sell 20-year bonds on Thursday.
• "It remains unclear whether sufficient demand will be generated at tomorrow's 20-year bond auction, given lingering inflation concerns," Ataru Okumura, a senior rate strategist at SMBC Nikko Securities, said in a note. "With the 10-year bond yield approaching 3%, speculation appears to be growing that the government will implement some form of measure to curb rising interest rates."
• The yield on the 40-year JGB JP40YTN=JBTC, Japan's longest tenor, dropped 2.5 bps to 4.180%. The 30-year yield JP30YTN=JBTC eased 1.5 bps to 4.120%, while the 20-year yield JP20YTN=JBTC held steady.

TOKYO, Aug 19 (Reuters) - Japanese government bonds (JGB) bounced back on Wednesday, gaining a measure of relief after a global rout in fixed income sent yields to multi-decade highs.