TOKYO: Long-term Japanese government bonds (JGBs) rallied on Thursday ahead of an auction that will test investor appetite amid fiscal worries that have driven yields higher, while markets remain focused on the upper house election scheduled for July 20.
Prices for 20- and 30-year JGBs sank earlier this week, driving yields sharply higher, on concerns that the government’s ruling coalition may lose their majority in the election.
The potential defeat could give power to opposition parties who have pledged in their campaign platforms to cut or abolish the sales tax.
The Ministry of Finance this month trimmed issuance of those bonds in response to record-high yields on those bonds scaled in May.
The 20-year JGB yield fell 2.5 basis points (bps) to 2.485%.
The 30-year yield fell 4.5 bps to 3.010%.
The benchmark 10-year yield edged down 0.5 bp to 1.495%.
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