TOKYO: Japan’s 10-year government bond yield fell on Monday, as investors continued to unwind positions they had made for the Bank of Japan’s early interest rate hikes.
The 10-year JGB yield fell 1.5 basis points (bps) to 1.33%.
“The market is doing the opposite of what they had been doing,” said Keisuke Tsuruta, a senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities.
Investors are now buying back bonds with mid-to-long term maturities, which they had shorted as they braced for the BOJ’s interest rate hikes.
The five-year yield fell 2.5 bps to 0.81% and the two-year JGB yield fell 2 bps to 0.585%.
Japan bonds sold, this time in relief
Earlier in the day, the BOJ Governor Kazuo Ueda said global and domestic economic uncertainty has increased sharply due to US tariff policy.
Ueda reiterated his previous view, but the comments provided relief to the market, which had expected the BOJ would raise the policy rate sooner, strategists said.
The bets that the BOJ could raise its policy rate beyond 1% sometime next year amid rising domestic prices and wages sent yields across some tenors to 17-year highs at the end of last month.
These expectations retreated after US President Donald Trump announced hefty reciprocal tariffs on dozens of countries on April 2.
“US tariffs will likely put downward pressure on global and Japanese economies through various channels,” Ueda said.
The 20-year JGB yield fell 0.5 bp to 2.360%.
The 30-year JGBs and the 40-year JGBs have not been priced, as of 0604 GMT.
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