TOKYO: Japanese government bond (JGB) yields fell across the curve on Wednesday, tracking an overnight slump in US Treasury yields, with the benchmark 10-year JGB yield touching multi-month lows.
The 10-year JGB yield was last down 3 basis points (bps) at 0.635%, ticking up slightly above a three-and-a-half month low of 0.620% hit earlier in the session.
Benchmark 10-year JGB futures rose to their highest since late July at 147.23 yen before settling around 147.03 yen.
US Treasury yields declined on Tuesday after a report showed job openings hit a more than a 2-1/2-year low in October, pushing the 10-year yield to three-month lows.
It hovered slightly above overnight lows in Asia hours and was last sitting around 4.19%.
Between softening economic data and dovish comments from some Federal Reserve officials, US Treasury yields have tumbled from multi-year highs reached in October.
The five-year JGB yield fell 2 bps to 0.235%, off a three-month low of 0.225%.
Where JGB yields settle for now largely depends on what happens with US Treasury yields going forward, said Keisuke Tsuruta, a fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities.
JGB yields mixed on higher US yields, poor demand at 10-year bond auction
“If US yields were to fall below 4%, I think it wouldn’t be strange if (JGB) yields declined a little further,” he said.
The superlong end saw the largest declines, with the 20-year yield falling as low as 1.355% for the first time since Sept. 1 before picking up to 1.365%.
The 30-year yield was down 6.5 bps at 1.595% ahead of an auction for the bond scheduled for Thursday.
With yields as low as they are, demand is likely to be weak at the auction, said Tsuruta, pointing to similarly low yields ahead of a 10-year JGB auction on Tuesday that saw relatively poor sales.
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