Japan’s super-long dated bonds fell, sending the yields to record high levels, as the market revived concerns about the nation’s financial health after Prime Minster Shigeru Ishiba’s close aide intended to resign from his post.
The 30-year JGB yield jumped 8 basis points (bps) to a record high of 3.28%.
The 20-year JGB yield rose 7 bps to 2.69%, its highest level since October 1999.Credit markets near records after $90 billion bond sale spree
Global credit markets saw a surge in activity. Borrowers globally sold investment-grade debt worth billions. US firms sold a huge amount of debt. European and Japanese markets also witnessed record-breaking issuances. Companies are capitalizing on strong investor demand. The Federal Reserve’s expected interest rate cut is also a factor. Experts believe this trend will continue, but volatility remains a concern.
Yields move inversely to prices.
Japan’s ruling Liberal Democratic Party’s (LDP) secretary general Hiroshi Moriyama said on Tuesday he intends to resign from his post, potentially affecting the fate of Ishiba who has resisted calls to quit over an election loss.
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“The possibility that Ishiba will step down from his post is high, and there will be pressure from both inside and outside of the LDP to expand the government spending,” said Takashi Fujiwara, chief fund manager at Resona Asset Management’s fixed income investment division. “I think it is unlikely, but we have to take a risk of Sanae Takaichi taking over the Ishiba’s position. She will pursue a low-interest rate policy while boosting spending,” he said. Takaichi, who faced off with Ishiba in a runoff vote in the LDP’s presidential election last year, had said the central bank should maintain ultra-low interest rates to support the economic recovery.
The 30-year bond auction to be held in the next session also weighed investor sentiment, said Fujiwara.
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