The 30-year JGB yield sank 1.5 basis points to 3.21%, a fourth straight day of decline since hitting a record 3.285% on Monday.
Bond yields fall when prices rise.
Japanese government bond yields showed mixed movements on Friday, with shorter-dated yields rising and longer-term yields falling. The 30-year JGB yield declined after hitting a record high, attracting dip buyers and international investors. Meanwhile, short-term JGB yields increased due to accelerating inflation and hawkish signals from the Bank of Japan, fueling speculation about potential interest rate hikes.
“Conditions in the super-long sector have been improving gradually, with a cheapening of the bonds drawing dip buyers,” said Naomi Muguruma, chief bond strategist, Mitsubishi UFJ Morgan Stanley Securities.
“The yield level is attractive for international investors as well.”
By contrast, the five-year yield climbed 1.5 bps to 1.135%, a fourth straight gain after dipping to a multi-week low on Tuesday. The 10-year yield rose 1.5 bps to 1.59%, a third session of gains following its drop to its own multi-week low. The two-year JGB hadn’t traded as of 0510 GMT, while the 20-year yield was flat at 2.645%.
Short-term JGB yields have climbed off lows as accelerating inflation and overall hawkish rhetoric from Bank of Japan officials recently keep bets alive for a near-term resumption of interest rate hikes.
Market-implied odds of a quarter-point increase by year-end stand at about 50%, although no change is widely expected at the meeting running Thursday and Friday of next week.
Meanwhile, 30-year yields peaked amid simmering worries over Japan’s finances after fiscally hawkish Prime Minister Shigeru Ishiba announced plans to step down on Sunday.
Among the leading candidates to replace him is Sanae Takaichi, who espouses loose monetary policy and increased fiscal spending. Takaichi has not yet declared her intention to seek the premiership.
Another likely frontrunner, who also hasn’t declared yet, is Farm Minister Shinjiro Koizumi, seen as the continuity candidate.
Updates on their plans could well emerge over Japan’s three-day weekend, Muguruma said, with markets shut Monday for a public holiday.
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