Japanese government bonds rallied on Thursday as yields at historic highs drew in buyers and political pressure on the nation’s fiscally conservative prime minister appeared to ease.
JGBs have skidded in recent months as concerns mounted about the government’s debt levels and deficit spending. Selling intensified after the Prime Minister Shigeru Ishiba-led coalition’s poor electoral showing last month.
Ishiba has insisted on staying on in the job, and domestic media reports this week indicated that momentum was waning for an early leadership vote within his Liberal Democratic Party (LDP).
“It looks more likely that the LDP won’t bring forward its presidential election,” said Katsutoshi Inadome, senior strategist at Sumitomo Mitsui Trust Asset Management.
The 30-year JGB yield (JP30YTN=JBTC) fell 4.5 basis points (bps) to 3.185% from the unprecedented 3.22% reached on Wednesday. The benchmark 10-year yield (JP10YTN=JBTC) fell 1 bp to 1.615% from the previous session’s 1.625%, the highest since 2008.
The 20-year yield (JP20YTN=JBTC) fell 3 bps to 2.620%. The two-year yield (JP2YTN=JBTC) fell 2 bps to 0.845% ahead of an auction of the debt in the afternoon.
The five-year yield (JP5YTN=JBTC) fell 1 bp to 1.150%.
AloJapan.com