JGB yields track decline in US Treasury peers

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TOKYO- Japanese government bond yields fell on Tuesday, tracking the declines in US Treasury yields overnight and as the Bank of Japan’s (BOJ) bond-buying operations saw a firm outcome for the bonds with super-long yields.

The 10-year JGB yield fell 1.5 basis points (bps) to 1.2 percent.

The two-year JGB yield fell 1 bp to 0.685 percent and the five-year yield fell 1.5 bps to 0.87 percent.

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“Demand for bonds with super-long maturities was supported by a firm outcome of the BOJ’s bond-buying operations,” said Miki Den, a senior Japan rate strategist at SMBC Nikko Securities.

The BOJ, earlier in the day, offered to buy bonds with maturities between one and 25 years in its regular bond-buying operations.

The BOJ raised interest rates on Friday to 0.5 percent, the highest since the 2008 global financial crisis, and revised up its inflation forecasts.

SMBC Nikko’s Den expects the BOJ to raise rates two more times this year, in July and December, to 1 percent.

“The 10-year JGB yield may rise further beyond 1.2 percent if the outcome of Japan’s “shunto” spring wage talks is strong and prices show faster growth,” said Den.

The 20-year JGB yield fell as much as 1 bp to 1.89 percent and was last down 0.5 bps at 1.895 percent.

The 30-year JGB yield fell to as low as 2.25 percent and was last down 0.5 bps at 2.255 percent. 

US Treasury yields tumbled to multi-week lows on Monday, tracking steep declines in equities, as investors sought the safety of government bonds, with tech stocks sinking on the emergence of a Chinese discount artificial intelligence model.

A solid auction of US five-year notes added more bids to Treasuries, further pushing yields lower.

The benchmark 10-year Treasury yield fell to a four-week low and was last down 9.5 basis points at 4.534 percent, on track for the biggest one-day fall in nearly two weeks. Both 20- and 30-year bond yields also slid to four-week troughs.

The two-year yield, which is typically tied to Federal Reserve policy expectations, fell to its lowest in seven weeks and was last down 7.5 bps at 4.197 percent. The three-, five-, and seven-year yields all slid to six-week lows.

Bonds rose as tech stocks, in particular, fell around the world. The popularity of a Chinese discount artificial intelligence model DeepSeek jolted investors’ faith in the profitability of AI and the sector’s voracious demand for high-tech chips.

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