TOKYO: Japan’s 10-year government bond (JGB) yield rose to its highest in more than 1-1/2 months on Thursday after US Treasury yields jumped following weak demand for the sale of 20-year bonds. The 10-year JGB yield rose 3.5 basis points (bps) to 1.55%, its highest since March 28.
US Treasury yields rose after soft demand for a $16 billion sale of 20-year bonds on Wednesday, with investors worried about the country’s increasing debt burden as Congress wrangles with a tax and spending bill that is expected to worsen the fiscal outlook.
Yields on JGBs were also under pressure from caution over mounting debt, with some political parties calling for consumption tax cuts to fend off rising prices, which Prime Minister Shigeru Ishiba so far has resisted.
The 30-year JGB yield rose 2 bps to 3.155%. The yield hit a record high of 3.185% in the previous session. The 20-year JGB yield rose 2 bps to 2.56%.
“The upcoming Upper House election in July might be a key to turn the course of the yields on super-long maturities,” said Miki Den, a senior Japan rate strategist at SMBC Nikko Securities.
JGB yields rise, tracking Treasury peers after Moody’s US downgrade
“If the Liberal Democratic Party wins the majority, there will be no consumption tax,” he said.
The yields also rose after a local media report that Japan will loosen its target timeframe for achieving a primary budget balance from fiscal 2025 to a range covering the fiscal 2025 and 2026 years.
The two-year JGB yield rose 0.5 bp to 0.72% and the five-year yield was up 1.5 bps at 1.01%.
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