TOKYO – Japanese government bond (JGB) yields fell to multi-week lows on Monday, pressured by declines in U.S. Treasury yields and as domestic long-term investors bought longer-dated bonds into the fiscal year-end.
The 10-year JGB yield declined 3 basis points (bps) to 0.685% as of 0530 GMT, the lowest level since Feb. 2.
The 20-year JGB yield lost 3 bps to 1.420%, the lowest in a month, while the 30-year yield dropped 3.5 bps to 1.680%, a level last seen on Jan. 18.
The U.S. benchmark 10-year yield fell 7 bps overnight, dropping back from a nearly three-month high after investors consolidated positions following a pricing in of a much less aggressive path for Federal Reserve interest rate cuts over the past two months.
The 10-year Treasury yield continued to decline in Asian hours on Monday, slipping an additional 3 bps to be around 4.23%.
Japanese bond yields were also under pressure as life insurers and other long-term investors bought the securities into the fiscal year-end next month. Bond yields fall when prices rise.
That is leading to a “bull flattening” of the JGB yield curve, as so-called superlong bonds attract the most demand, Noriatsu Tanji, chief bond strategist at Mizuho Securities, wrote in a note.
“If past trends are followed, the bull flattening pressure may continue until late March,” he said.
The premium offered by 20-year JGB yields over 10-year yields has fallen to about 73 bps from almost 82 bps at the start of this month.
Meanwhile, five-year JGB yields edged down 1 bp to 0.345% on Monday. Two-year JGBs had yet to trade on the day.
Benchmark 10-year JGB futures rose 0.29 yen to 146.51. (Reporting by Kevin Buckland; Editing by Mrigank Dhaniwala)
