Japan government bond yields fall as global markets steady

Japanese government bond (JGB) yields fell on Friday, with the benchmark 10-year yield touching a low last seen in mid-September as global bond markets steadied and investors reassessed the outlook for central bank tightening.

Here are a few details:

The benchmark 10-year JGB yield eased 4.5 basis points to 3.050%, edging lower from the 30-year high seen a week ago. Yields move inversely to bond prices.

Global bond yields steadied after a volatile week, with US Treasury yields falling from multi-decade highs as dip-buyers stepped in and Federal Reserve officials signalled a more patient approach to further rate hikes.

Bonds Corner Powered By Japan government bond yields fall as global markets steady

Japanese government bond yields saw a significant drop on Friday, as the 10-year yield fell to levels not recorded since mid-September. Global bond markets stabilizing and shifts in central bank policies played a key role in this decline. Even though the Bank of Japan raised rates recently, inflation in Tokyo is rising, fueling predictions of additional rate hikes.

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Investors continued to weigh the Bank of Japan's shift to a more preemptive tightening stance after last month's hike to 1.25%. Market pricing now points to the next hike likely coming in December rather than October.

"Today's Japanese bond market is expected to see buying dominate, driven by the strength of US Treasuries and heightened risk aversion," Takayuki Miyajima, senior economist at Sony Financial Group, said in a note.

"However, with upside risks to inflation persisting due to high crude oil prices and rising food costs, market expectations that the Bank of Japan will accelerate the pace of rate hikes have not completely faded."

Annual core inflation in Tokyo accelerated in September at the fastest pace in 10 months, data showed on Friday, highlighting mounting price pressures that bolster the case for further rate hikes.

The yield on the 30-year JGB slid 4 basis points to 4.130%.

The 2-year yield, the one most sensitive to BOJ policy rates, had yet to trade, and the 5-year yield also remained unchanged.
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