Long-term Japanese bonds rise as elevated yields, haven demand draw buyers
TLT•Long-term Japanese government bonds extended gains, with the 20-year yield falling 1 basis point to 3.690%, as high yields and safe-haven demand drew investors back. A poll found most economists expect the Bank of Japan to raise its policy rate to 1.50% in December from 1.25%.
1. JGBs extend gains
Long-term Japanese government bonds extended gains on Wednesday as high yields and safe-haven demand brought investors back to debt markets. The 20-year yield fell 1 basis point to 3.690%, heading for a third consecutive session of decline; yields move inversely to bond prices.
2. Global yields fall
Longer-dated U.S. Treasury yields fell on Tuesday after weak housing data, while German Bund yields dropped on safe-haven demand. The moves followed a broad global selloff over the past month that pushed long-term yields to multi-decade highs on inflation risks and heavy government borrowing. JGB yields fell sharply and the yen rallied on Tuesday after a 20-year bond auction saw record-high demand.
3. Rate outlook
A poll published Wednesday found that a majority of economists expect the Bank of Japan to raise its policy rate to 1.50% in December from 1.25%; a hike is considered unlikely at the meeting ending October 30. National Australia Bank markets research head Skye Masters said higher yields were bringing investors back and were consistent with signs of increased Japanese capital repatriation.
