TOKYO — Japan’s yield curve steepened on Monday amid a sell-off of super-long maturity bonds as concerns about the nation’s fiscal health resurfaced ahead of upper house elections this month.
The 20-year JGB yield rose 4.5 basis points to 2.415 percent, its highest since June 4.
The 30-year JGB yield jumped 5.5 bps to 2.92 percent.
Polls released by local media over the weekend raised concerns that the Liberal Democratic Party and coalition partner Komeito could lose their majority at the July 20 election.
“If that happens, the LDP may have to agree with other parties’ calls to reduce taxes,” said Katsutoshi Inadome, senior strategist at Sumitomo Mitsui Trust Asset Management.
The coalition plans to include cash handouts in their campaign pledges to help households cope with inflation, but has resisted calls from opposition parties for tax cuts.
The yields on super-long bonds rose to their record highs in May on growing concerns about the worsening fiscal condition.
The sell-off eased after Reuters reported in the same month that the Ministry of Finance was considering trimming issuance of such bonds.
But a reduced sale of the bonds has not helped revive demand for the bonds. An auction of 30-year bonds last week witnessed a weak outcome, sending the yield up 6 bps on that day.
